Section 23. Election of Directors or Trustees.

February 20, 2019 Section 24. Corporate Officers.

Section 25. Report of Election of Directors, Trustees and Officers,
Non-holding of Election and Cessation from Office.
REPUBLIC ACT NO. 11232 Section 26. Disqualification of Directors, Trustees or Officers.
Section 27. Removal of Directors or Trustees.
Section 28. Vacancies in the Office of Director or Trustee; Emergency
Board.
AN ACT PROVIDING FOR THE Section 29. Compensation of Directors or Trustees.
REVISED CORPORATION CODE OF Section 30. Liability of Directors, Trustees or Officers.
Section 31. Dealings of Directors, Trustees or Officers with the
THE PHILIPPINES Corporation. Section 32. Contracts Between Corporations with
Interlocking Directors. Section 33. Disloyalty of a Director.
TITLE I Section 34. Executive, Management and Other Special Committees.
GENERAL PROVISIONS DEFINITIONS AND
CLASSIFICATIONS TITLE IV
POWERS OF CORPORATION
Section 1. Title of the Code. Section 35. Corporate Powers and Capacity.
Section 2. Corporation Defined. Section 36. Power to Extend or Shorten Corporate Term
Section 3. Classes of Corporations. Section 37. Power to Increase or Decrease Capital Stock; Incur, Create or
Section 4. Corporations Created by Special Laws or Charters. Section 5. Increase Bonded Indebtedness.
Corporators and Incorporators, Stockholders and Members. Section 6. Section 38. Power to Deny Pre-Emptive Right.
Classification of Shares. Section 39. Sale or Other Disposition of Assets.
Section 7. Founders’ Shares. Section 40. Power to Acquire Own Shares.
Section 8. Redeemable Shares. Section 41. Power to Invest Corporate Funds in Another Corporation or
Section 9. Treasury Shares. Business or For Any Other Purpose.
Section 42. Power to Declare Dividends.
TITLE II Section 43. Power to Enter Into Management Contract.
Section 44. Ultra Vires Acts of Corporations.
INCORPORATION AND ORGANIZATION OF
PRIVATE CORPORATIONS TITLE V
Section 10. Number and Qualifications of Incorporators.
Section 11. Corporate Term.
BYLAWS
Section 12. Minimum Capital Stock Not Required of Stock Corporations. Section 45. Adoption of ByLaws.
Section 13. Contents of the Articles of Incorporation. Section 46. Contents of ByLaws.
Section 14. Form of Articles of Incorporation. Section 47. Amendment to ByLaws.
Section 15. Amendment of Articles of Incorporation.
Section 16. Grounds When Articles of Incorporation or Amendment May
Be Disapproved. Section 17. Corporate Name. TITLE VI
Section 18. Registration, Incorporation and Commencement of MEETINGS
Corporate Existence. Section 48. Kinds of Meetings.
Section 19. De Facto Corporations. Section 49. Regular and Special Meetings of Stockholders or Members.
Section 20. Corporation by Estoppel. Section 50. Place and Time of Meetings of Stockholders or Members.
Section 21. Effects of Non-Use of Corporate Charter and Continuous Section 51. Quorum in Meetings.
Inoperation. Section 52. Regular and Special Meetings of Directors or Trustees;
Quorum.
TITLE III Section 53. Who Shall Preside at Meetings.
BOARD OF DIRECTORS, TRUSTEES, OFFICERS Section 54. Right to Vote of Secured Creditors and Administrators.
Section 55. Voting in Case of Joint Ownership of Stock.
Section 22. The Board of Directors or Trustees; Qualification and Term. Section 56. Voting Right for Treasury Shares.
Section 57. Manner of Voting; Proxies.
Section 58. Voting Trusts.
Section 59. Subscription Contract.
TITLE VII
STOCKS AND STOCKHOLDERS
Section 60. Pre-Incorporation Subscription.
Section 61. Consideration for Stocks.
Section 62. Certificate of Stock and Transfer of Shares.
Section 63. Issuance of Stock Certificates.
Section 64. Liability of Directors for Watered Stocks.
Section 65. Interest on Unpaid Subscriptions.
Section 66. Payment of Balance of Subscription.
Section 67. Delinquency Sale.
Section 68. When Sale May Be Questioned.
Section 69. Court Action to Recover Unpaid Subscription.
Section 70. Effect of Delinquency.
Section 71. Rights of Unpaid Shares, Non-Delinquent.
Section 72. Lost or Destroyed Certificates.
TITLE VIII
CORPORATE BOOKS AND RECORDS
Section 73. Books to be Kept; Stock Transfer Agent.
Section 74. Right to Financial Statements.
TITLE IX
MERGER AND CONSOLIDATION
Section 75. Plan of Merger or Consolidation.
Section 76. Stockholders’ or Members’ Approval.
Section 77. Articles of Merger or Consolidation.
Section 78. Effectivity of Merger or Consolidation.
Section 79. Effects of Merger or Consolidation.
TITLE X APPRAISAL RIGHT
Section 80. When the Right of Appraisal may be Exercised.
Section 81. How Right is Exercised.
Section 82. Effect of Demand and Termination of Right.
Section 83. When Right to Payment Ceases.
Section 84. Who Bears Costs of Appraisal.
Section 85. Notation on Certificates; Rights of Transferee.
TITLE XI
NON-STOCK CORPORATION
Section 86. Definition.
Section 87. Purposes.
CHAPTER I – MEMBERS
Section 88. Right to Vote.
Section 89. Non-Transferability of Membership.
Section 90. Termination of Membership.
CHAPTER II – TRUSTEES AND OFFICERS
Section 91. Election and Term of Trustees.
Section 92. List of Members and Proxies, Place of Meetings.
CHAPTER III – DISTRIBUTION OF ASSETS IN NON-STOCK
CORPORATIONS
Section 93. Rules of Distribution.
Section 94. Plan of Distribution of Assets.
TITLE XII
CLOSE CORPORATIONS
Section 95. Definition and Applicability of Title.
Section 96. Articles of Incorporation.
Section 97. Validity of Restrictions on Transfer of Shares.
Section 98. Effects of Issuance or Transfer of Stock in Breach of
Qualifying Conditions.
Section 99. Agreements by Stockholders.
Section 100. When Board Meeting is Unnecessary or Improperly Held.
Section 101. Pre-Emptive Right in Close Corporations.
Section 102. Amendment of Articles of Incorporation.
Section 103. Deadlocks.
Section 104. Withdrawal of Stockholder or Dissolution of Corporation.
TITLE XIII
SPECIAL CORPORATIONS
CHAPTER I – EDUCATIONAL CORPORATIONS
Section 105. Incorporation.
Section 106. Board of Trustees.
CHAPTER II – RELIGIOUS CORPORATIONS
Section 107. Classes of Religious Corporations.
Section 108. Corporation Sole.
Section 109. Articles of Incorporation.
Section 110. Submission of the Articles of Incorporation.
Section 111. Acquisition and Alienation of Property.
Section 112. Filling of Vacancies.
Section 113. Dissolution.
Section 114. Religious Societies.
CHAPTER III – ONE PERSON CORPORATIONS
Section 115. Applicability of Provisions to One Person Corporations.
Section 116. One Person Corporation.
Section 117. Minimum Capital Stock Not Required for One Person
Corporation.
Section 118. Articles of Incorporation.
Section 119. By-Laws.
Section 120. Display of Corporate Name.
Section 121. Single Stockholder as Director, President.
Section 122. Treasurer, Corporate Secretary, and Other Officers.
Section 123. Special Functions of the Corporate Secretary.
Section 124. Nominee and Alternate Nominee.
Section 125. Term of Nominee and Alternate Nominee.
Section 126. Change of Nominee or Alternate Nominee.
Section 127. Minutes Book.
Section 128. Records in Lieu of Meetings.
Section 129. Reportorial Requirements.
Section 130. Liability of Single Shareholder.
Section 131. Conversion from an Ordinary Corporation to a One Person
Corporation.
Section 132. Conversion from a One Person Corporation to an Ordinary
Stock Corporation.
TITLE XIV
DISSOLUTION
Section 133. Methods of Dissolution.
Section 134. Voluntary Dissolution Where No Creditors are Affected.
Section 135. Voluntary Dissolution Where Creditors are Affected;
Procedure and Contents of Petition.
Section 136. Dissolution by Shortening Corporate Term.
Section 137. Withdrawal of Request and Petition for Dissolution.
Section 138. Involuntary Dissolution.
Section 139. Corporate Liquidation.
TITLE XV
FOREIGN CORPORATIONS
Section 140. Definition and Rights of Foreign Corporations.
Section 141. Application to Existing Foreign Corporations.
Section 142. Application for a License.
Section 143. Issuance of a License.
Section 144. Who May Be a Resident Agent.
Section 145. Resident Agent; Service of Process.
Section 146. Law Applicable.
Section 147. Amendments to Articles of Incorporation or By-Laws of
Foreign Corporations.
Section 148. Amended License.
Section 149. Merger or Consolidation Involving a Foreign Corporation
Licensed in the Philippines.
Section 150. Doing Business Without a License.
Section 151. Revocation of License.
Section 152. Issuance of Certificate of Revocation.
Section 153. Withdrawal of Foreign Corporations.
TITLE XVI
INVESTIGATIONS, OFFENSES, AND PENALTIES
Section 154. Investigation and Prosecution of Offenses.
Section 155. Administration of Oaths, Subpoena of Witnesses and
Documents.
Section 156. Cease and Desist Orders.
Section 157. Contempt.
Section 158. Administrative Sanctions.
Section 159. Unauthorized Use of Corporate Name; Penalties.
Section 160. Violation of Disqualification Provision; Penalties.
Section 161. Violation of Duty to Maintain Records, to Allow Their
Inspection or Reproduction; Penalties.
Section 162. Willful Certification of Incomplete, Inaccurate, False, or
Misleading Statements or Reports; Penalties.
Section 163. Independent Auditor Collusion; Penalties.
Section 164. Obtaining Corporate Registration Through Fraud;
Penalties.
Section 165. Fraudulent Conduct of Business; Penalties.
Section 166. Acting as Intermediaries for Graft and Corrupt Practices;
Penalties.
Section 167. Engaging Intermediaries for Graft and Corrupt Practices;
Penalties.
Section 168. Tolerating Graft and Corrupt Practices; Penalties.
Section 169. Retaliation Against Whistleblowers.
Section 170. Other Violations of the Code; Separate Liability.
Section 171. Liability of Directors, Trustees, Officers, or Other
Employees.
Section 172. Liability of Aiders and Abettors and Other Secondary
Liability.
TITLE XVII MISCELLANEOUS PROVISIONS
Section 173. Outstanding Capital Stock Defined.
Section 174. Designation of Governing Boards.
Section 175. Collection and Use of Registration, Incorporation and Other
Fees.
Section 176. Stock Ownership in Corporations.
Section 177. Reportorial Requirements of Corporations.
Section 178. Visitorial Power and Confidential Nature of Examination
Results.
Section 179. Powers, Functions, and Jurisdiction of the Commission.
Section 180. Development and Implementation of Electronic Filing and
Monitoring System.
Section 181. Arbitration for Corporations.
Section 182. Jurisdiction Over Party-List Organizations.
Section 183. Applicability of the Code.
Section 184. Effect of Amendment or Repeal of this Code, or the
Dissolution of a Corporation.
Section 185. Applicability to Existing Corporations.
Section 186. Separability Clause.
Section 187. Repealing Clause.
Section 188. Effectivity Clause.
 TITLE I
General Provisions
Definitions and Classifications
SECTION 1. Title of the Code. — This Code shall be known as the
"Revised Corporation Code of the Philippines."
SECTION 2. Corporation Defined.— A corporation is an artificial
being created by operation of law, having the right of succession and
the powers, attributes, and properties expressly authorized by law or
incidental to its existence.
SECTION 3. Classes of Corporations. — Corporations formed or
organized under this Code may be stock or nonstock corporations.
Stock corporations are those which have capital stock divided into
shares and are authorized to distribute to the holders of such shares,
dividends, or allotments of the surplus profits on the basis of the shares
held. All other corporations are nonstock corporations.
SECTION 4. Corporations Created by Special Laws or Charters. —
Corporations created by special laws or charters shall be governed
primarily by the provisions of the special law or charter creating them
or applicable to them, supplemented by the provisions of this Code,
insofar as they are applicable.
SECTION 5. Corporators and Incorporators, Stockholders and
Members.— Corporators are those who compose a corporation, whether
as stockholders or shareholders in a stock corporation or as members in
a nonstock corporation. Incorporators are those stockholders or
members mentioned in the articles of incorporation as originally
forming and composing the corporation and who are signatories
thereof.
SECTION 6. Classification of Shares.— The classification of
shares, their corresponding rights, privileges, or restrictions, and their
stated par value, if any, must be indicated in the articles of
incorporation. Each share shall be equal in all respects to every other
share, except as otherwise provided in the articles of incorporation and
in the certificate of stock.
The shares in stock corporations may be divided into classes or
series of shares, or both. No share may be deprived of voting rights
except those classified and issued as "preferred" or "redeemable" shares,
unless otherwise provided in this Code: Provided,That there shall
always be a class or series of shares with complete voting rights.
Holders of nonvoting shares shall nevertheless be entitled to
vote on the following matters:
(a) Amendment of the articles of incorporation;
(b) Adoption and amendment of bylaws;
(c) Sale, lease, exchange, mortgage, pledge, or other
disposition of all or substantially all of the
corporate property;
(d) Incurring, creating, or increasing bonded
indebtedness;
(e) Increase or decrease of authorized capital stock;
(f) Merger or consolidation of the corporation with
another corporation or other corporations;
(g) Investment of corporate funds in another
corporation or business in accordance with
this Code; and
(h) Dissolution of the corporation.
Except as provided in the immediately preceding
paragraph, the vote required under this Code
to approve a particular corporate act shall be
deemed to refer only to stocks with voting
rights.
The shares or series of shares may or may not have a
par value: Provided,That banks, trust,
insurance, and preneed companies, public
utilities, building and loan associations, and
other corporations authorized to obtain or
access funds from the public, whether
publicly listed or not, shall not be permitted
to issue no-par value shares of stock.
Preferred shares of stock issued by a corporation
may be given preference in the distribution of
dividends and in the distribution of corporate
assets in case of liquidation, or such other
preferences: Provided,That preferred shares of
stock may be issued only with a stated par
value. The board of directors, where
authorized in the articles of incorporation,
may fix the terms and conditions of preferred
shares of stock or any series thereof: Provided,
further,That such terms and conditions shall
be effective upon filing of a certificate thereof
with the Securities and Exchange
Commission, hereinafter referred to as the
"Commission".
Shares of capital stock issued without par value
shall be deemed fully paid and nonassessable
and the holder of such shares shall not be
liable to the corporation or to its creditors in
respect thereto: Provided,That no-par value
shares must be issued for a consideration of at
 least Five pesos (P5.00) per share: Provided,
further,That the entire consideration received
by the corporation for its no-par value shares
shall be treated as capital and shall not be
available for distribution as dividends.
A corporation may further classify its shares for the
purpose of ensuring compliance with
constitutional or legal requirements.
SECTION 7. Founders' Shares.— Founders' shares may be given
certain rights and privileges not enjoyed by the owners of other stocks.
Where the exclusive right to vote and be voted for in the election of
directors is granted, it must be for a limited period not to exceed five (5)
years from the date of incorporation: Provided, That such exclusive right
shall not be allowed if its exercise will violate Commonwealth Act No.
108, otherwise known as the "Anti-Dummy Law"; Republic Act No.
7042, otherwise known as the "Foreign Investments Act of 1991"; and
other pertinent laws. CAIHTE
SECTION 8. Redeemable Shares. — Redeemable shares may be
issued by the corporation when expressly provided in the articles of
incorporation. They are shares which may be purchased by the
corporation from the holders of such shares upon the expiration of a
fixed period, regardless of the existence of unrestricted retained
earnings in the books of the corporation, and upon such other terms
and conditions stated in the articles of incorporation and the certificate
of stock representing the shares, subject to rules and regulations issued
by the Commission.
SECTION 9. Treasury Shares.— Treasury shares are shares of
stock which have been issued and fully paid for, but subsequently
reacquired by the issuing corporation through purchase, redemption,
donation, or some other lawful means. Such shares may again be
disposed of for a reasonable price fixed by the board of directors.
TITLE II
Incorporation and Organization of Private
Corporations
SECTION 10. Number and Qualifications of Incorporators.— Any
person, partnership, association or corporation, singly or jointly with
others but not more than fifteen (15) in number, may organize a
corporation for any lawful purpose or purposes: Provided,That natural
persons who are licensed to practice a profession, and partnerships or
associations organized for the purpose of practicing a profession, shall
not be allowed to organize as a corporation unless otherwise provided
under special laws. Incorporators who are natural persons must be of
legal age.
Each incorporator of a stock corporation must own or be a
subscriber to at least one (1) share of the capital stock.
A corporation with a single stockholder is considered a One
Person Corporation as described in Title XIII, Chapter III of this Code.
SECTION 11. Corporate Term.— A corporation shall have
perpetual existence unless its articles of incorporation provides
otherwise.
Corporations with certificates of incorporation issued prior to
the effectivity of this Code, and which continue to exist, shall have
perpetual existence, unless the corporation, upon a vote of its
stockholders representing a majority of its outstanding capital stock,
notifies the Commission that it elects to retain its specific corporate
term pursuant to its articles of incorporation: Provided, That any change
in the corporate term under this section is without prejudice to the
appraisal right of dissenting stockholders in accordance with the
provisions of this Code.
A corporate term for a specific period may be extended or
shortened by amending the articles of incorporation: Provided,That no
extension may be made earlier than three (3) years prior to the original
or subsequent expiry date(s) unless there are justifiable reasons for an
earlier extension as may be determined by the Commission: Provided,
further,That such extension of the corporate term shall take effect only
on the day following the original or subsequent expiry date(s).
A corporation whose term has expired may apply for a revival
of its corporate existence, together with all the rights and privileges
under its certificate of incorporation and subject to all of its duties,
debts and liabilities existing prior to its revival. Upon approval by the
Commission, the corporation shall be deemed revived and a certificate
of revival of corporate existence shall be issued, giving it perpetual
existence, unless its application for revival provides otherwise.
No application for revival of certificate of incorporation of
banks, banking and quasi-banking institutions, preneed, insurance and
trust companies, non-stock savings and loan associations
(NSSLAs),pawnshops, corporations engaged in money service
business, and other financial intermediaries shall be approved by the
Commission unless accompanied by a favorable recommendation of
the appropriate government agency.
SECTION 12. Minimum Capital Stock Not Required of Stock
Corporations.— Stock corporations shall not be required to have a
minimum capital stock, except as otherwise specifically provided by
special law.
SECTION 13. Contents of the Articles of Incorporation. — All
corporations shall file with the Commission articles of incorporation in
any of the official languages, duly signed and acknowledged or
authenticated, in such form and manner as may be allowed by the
Commission, containing substantially the following matters, except as
otherwise prescribed by this Code or by special law:
(a) The name of the corporation;
 (b) The specific purpose or purposes for which the document, in accordance with the Commissions rules and regulations
corporation is being formed. Where a on electronic filing.
corporation has more than one stated
SECTION 14. Form of Articles of Incorporation.— Unless
purpose, the articles of incorporation shall
otherwise prescribed by special law, the articles of incorporation of all
indicate the primary purpose and the
domestic corporations shall comply substantially with the following
secondary purpose or purposes: Provided,That
form:
a nonstock corporation may not include a
purpose which would change or contradict its Articles of Incorporation
nature as such;
of
(c) The place where the principal office of the
________________________
corporation is to be located, which must be
within the Philippines; (Name of Corporation)
(d) The term for which the corporation is to exist, if The undersigned incorporators, all of legal age, have
the corporation has not elected perpetual voluntarily agreed to form a (stock) (nonstock) corporation under the
existence; laws of the Republic of the Philippines and certify the following:
(e) The names, nationalities, and residence addresses First: That the name of said corporation shall be
of the incorporators; "________________, Inc.,Corporation or OPC";
(f) The number of directors, which shall not be more Second: That the purpose or purposes for which such
than fifteen (15) or the number of trustees corporation is incorporated are: (If there is more than one purpose,
which may be more than fifteen (15); indicate primary and secondary purposes);
(g) The names, nationalities, and residence addresses Third: That the principal office of the corporation is located in
of persons who shall act as directors or the City/Municipality of ____________, Province of
trustees until the first regular directors or ____________________, Philippines;
trustees are duly elected and qualified in
accordance with this Code; Fourth: That the corporation shall have perpetual existence or
a term of ________ years from the date of issuance of the certificate of
(h) If it be a stock corporation, the amount of its incorporation;
authorized capital stock, number of shares
into which it is divided, the par value of each, Fifth: That the names, nationalities, and residence addresses of
names, nationalities, and residence addresses the incorporators of the corporation are as follows:
of the original subscribers, amount
subscribed and paid by each on the
subscription, and a statement that some or all Name Nationality Residence
of the shares are without par value, if
applicable;
____________ _____________ _____________
(i) If it be a nonstock corporation, the amount of its ___ __ __
capital, the names, nationalities, and
residence addresses of the contributors, and ____________ _____________ _____________
amount contributed by each; and ___ __ __
(j) Such other matters consistent with law and which
____________ _____________ _____________
the incorporators may deem necessary and
___ __ __
convenient.
An arbitration agreement may be provided in the articles of ____________ _____________ _____________
incorporation pursuant to Section 181 of this Code. ___ __ __
The articles of incorporation and applications for amendments
thereto may be filed with the Commission in the form of an electronic
____________ _____________ _____________
___ __ __
Name of National No. of Amount Amount Paid
Subscribe ity Shares Subscrib
____________ _____________ _____________
r Subscrib ed
___ __ __
ed

Sixth: That the number of directors or trustees of the

corporation shall be _____________; and the names, nationalities, and
residence addresses of the first directors or trustees of the corporation
are as follows:

Name Nationality Residence

____________ _____________ _____________

___ __ __

____________ _____________ _____________

(Modify No. 8 if shares are with no-par value. In case the
___ __ __
corporation is nonstock, Nos. 7 and 8 of the above articles may be
modified accordingly, and it is sufficient if the articles state the amount
____________ _____________ _____________
of capital or money contributed or donated by specified persons,
___ __ __
stating the names, nationalities, and residence addresses of the
contributors or donors and the respective amount given by each.)
____________ _____________ _____________
___ __ __ Ninth: That ________________ has been elected by the
subscribers as Treasurer of the Corporation to act as such until after the
____________ _____________ _____________ successor is duly elected and qualified in accordance with the bylaws,
___ __ __ that as Treasurer, authority has been given to receive in the name and
for the benefit of the corporation, all subscriptions, contributions or
____________ _____________ _____________ donations paid or given by the subscribers or members, who certifies
___ __ __ the information set forth in the seventh and eighth clauses above, and
that the paid-up portion of the subscription in cash and/or property for
the benefit and credit of the corporation has been duly received.
DETACa
Seventh: That the authorized capital stock of the corporation is
___________ PESOS (P______),divided into ________ shares with the Tenth: That the incorporators undertake to change the name of
par value of _________ PESOS (P______) per share. (In case all the the corporation immediately upon receipt of notice from the
shares are without par value):That the capital stock of the corporation is Commission that another corporation, partnership or person has
__________________ shares without par value. acquired a prior right to the use of such name, that the name has been
declared not distinguishable from a name already registered or
(In case some shares have par value and some are without par reserved for the use of another corporation, or that it is contrary to law,
value):That the capital stock of said corporation consists of public morals, good customs or public policy.
_____________________ shares, of which ___________________ shares
have a par value of _________________ PESOS (P__________) each, and Eleventh: (Corporations which will engage in any business or
of which ____________________ shares are without par value. activity reserved for Filipino citizens shall provide the following):

Eighth: That the number of shares of the authorized capital "No transfer of stock or interest which shall
stock above-stated has been subscribed as follows: reduce the ownership of Filipino citizens to less than
the required percentage of capital stock as provided
 by existing laws shall be allowed or permitted to be
recorded in the proper books of the corporation, and
this restriction shall be indicated in all stock
certificates issued by the corporation."
IN WITNESS WHEREOF, we have hereunto signed these
Articles of Incorporation, this _________ day of ___________, 20___ in
the City/Municipality of _____________, Province of _______________,
Republic of the Philippines.
_________________ _________________
_________________ _________________
_________________ _________________
_________________ _________________
_________________ _________________
(Names and signatures of the incorporators)
_________________________________
(Name and signature of Treasurer)
SECTION 15. Amendment of Articles of Incorporation. — Unless
otherwise prescribed by this Code or by special law, and for legitimate
purposes, any provision or matter stated in the articles of incorporation
may be amended by a majority vote of the board of directors or trustees
and the vote or written assent of the stockholders representing at least
two-thirds (2/3) of the outstanding capital stock, without prejudice to
the appraisal right of dissenting stockholders in accordance with the
provisions of this Code. The articles of incorporation of a nonstock
corporation may be amended by the vote or written assent of majority
of the trustees and at least two-thirds (2/3) of the members.
The original and amended articles together shall contain all
provisions required by law to be set out in the articles of incorporation.
Amendments to the articles shall be indicated by underscoring the
change or changes made, and a copy thereof duly certified under oath
by the corporate secretary and a majority of the directors or trustees,
with a statement that the amendments have been duly approved by the
required vote of the stockholders or members, shall be submitted to the
Commission.
The amendments shall take effect upon their approval by the
Commission or from the date of filing with the said Commission if not
acted upon within six (6) months from the date of filing for a cause not
attributable to the corporation.
SECTION 16. Grounds When Articles of Incorporation or
Amendment May be Disapproved. — The Commission may disapprove
the articles of incorporation or any amendment thereto if the same is
not compliant with the requirements of this Code: Provided,That the
Commission shall give the incorporators, directors, trustees, or officers
a reasonable time from receipt of the disapproval within which to
modify the objectionable portions of the articles or amendment. The
following are grounds for such disapproval:
(a) The articles of incorporation or any amendment
thereto is not substantially in accordance with
the form prescribed herein;
(b) The purpose or purposes of the corporation are
patently unconstitutional, illegal, immoral or
contrary to government rules and regulations;
(c) The certification concerning the amount of capital
stock subscribed and/or paid is false; and
(d) The required percentage of Filipino ownership of
the capital stock under existing laws or the
Constitution has not been complied with.
No articles of incorporation or amendment to
articles of incorporation of banks, banking
and quasi-banking institutions, preneed,
insurance and trust companies, NSSLAs,
pawnshops, and other financial
intermediaries shall be approved by the
Commission unless accompanied by a
favorable recommendation of the appropriate
government agency to the effect that such
articles or amendment is in accordance with
law.
SECTION 17. Corporate Name. — No corporate name shall be
allowed by the Commission if it is not distinguishable from that
already reserved or registered for the use of another corporation, or if
such name is already protected by law, or when its use is contrary to
existing law, rules and regulations.
A name is not distinguishable even if it contains one or more of
the following:
(a) The word
"corporation","company","incorporated","limi
 ted","limited liability",or an abbreviation of
one of such words; and
(b) Punctuations, articles, conjunctions, contractions,
prepositions, abbreviations, different tenses,
spacing, or number of the same word or
phrase.
The Commission, upon determination that the corporate name
is: (1) not distinguishable from a name already reserved or registered
for the use of another corporation; (2) already protected by law; or (3)
contrary to law, rules and regulations, may summarily order the
corporation to immediately cease and desist from using such name and
require the corporation to register a new one. The Commission shall
also cause the removal of all visible signages, marks, advertisements,
labels, prints and other effects bearing such corporate name. Upon the
approval of the new corporate name, the Commission shall issue a
certificate of incorporation under the amended name.
If the corporation fails to comply with the Commission's order,
the Commission may hold the corporation and its responsible directors
or officers in contempt and/or hold them administratively, civilly
and/or criminally liable under this Code and other applicable laws
and/or revoke the registration of the corporation.
SECTION 18. Registration, Incorporation and Commencement of
Corporate Existence. — A person or group of persons desiring to
incorporate shall submit the intended corporate name to the
Commission for verification. If the Commission finds that the name is
distinguishable from a name already reserved or registered for the use
of another corporation, not protected by law and is not contrary to law,
rules and regulations, the name shall be reserved in favor of the
incorporators. The incorporators shall then submit their articles of
incorporation and bylaws to the Commission.
If the Commission finds that the submitted documents and
information are fully compliant with the requirements of this Code,
other relevant laws, rules and regulations, the Commission shall issue
the certificate of incorporation.
A private corporation organized under this Code commences
its corporate existence and juridical personality from the date the
Commission issues the certificate of incorporation under its official seal
and thereupon the incorporators, stockholders/members and their
successors shall constitute a body corporate under the name stated in
the articles of incorporation for the period of time mentioned therein,
unless said period is extended or the corporation is sooner dissolved in
accordance with law.
SECTION 19. De Facto Corporations. — The due incorporation
of any corporation claiming in good faith to be a corporation under this
Code, and its right to exercise corporate powers, shall not be inquired
into collaterally in any private suit to which such corporation may be a
party. Such inquiry may be made by the Solicitor General in a quo
warranto proceeding.
SECTION 20. Corporation by Estoppel.— All persons who
assume to act as a corporation knowing it to be without authority to do
so shall be liable as general partners for all debts, liabilities and
damages incurred or arising as a result thereof: Provided, however,That
when any such ostensible corporation is sued on any transaction
entered by it as a corporation or on any tort committed by it as such, it
shall not be allowed to use its lack of corporate personality as a defense.
Anyone who assumes an obligation to an ostensible corporation as
such cannot resist performance thereof on the ground that there was in
fact no corporation.
SECTION 21. Effects of Non-Use of Corporate Charter and
Continuous Inoperation.— If a corporation does not formally organize
and commence its business within five (5) years from the date of its
incorporation, its certificate of incorporation shall be deemed revoked
as of the day following the end of the five (5)-year period.
However, if a corporation has commenced its business but
subsequently becomes inoperative for a period of at least five (5)
consecutive years, the Commission may, after due notice and hearing,
place the corporation under delinquent status.
A delinquent corporation shall have a period of two (2) years
to resume operations and comply with all requirements that the
Commission shall prescribe. Upon compliance by the corporation, the
Commission shall issue an order lifting the delinquent status. Failure to
comply with the requirements and resume operations within the period
given by the Commission shall cause the revocation of the corporation's
certificate of incorporation.
The Commission shall give reasonable notice to, and
coordinate with the appropriate regulatory agency prior to the
suspension or revocation of the certificate of incorporation of
companies under their special regulatory jurisdiction.
TITLE III
Board of Directors/Trustees and Officers
SECTION 22. The Board of Directors or Trustees of a Corporation;
Qualification and Term. — Unless otherwise provided in this Code, the
board of directors or trustees shall exercise the corporate powers,
conduct all business, and control all properties of the corporation.
Directors shall be elected for a term of one (1) year from among
the holders of stocks registered in the corporation's books, while
trustees shall be elected for a term not exceeding three (3) years from
among the members of the corporation. Each director and trustee shall
hold office until the successor is elected and qualified. A director who
ceases to own at least one (1) share of stock or a trustee who ceases to
be a member of the corporation shall cease to be such.
The board of the following corporations vested with public
interest shall have independent directors constituting at least twenty
percent (20%) of such board:
(a) Corporations covered by Section 17.2 of Republic
Act No. 8799, otherwise known as "The
Securities Regulation Code," namely those
whose securities are registered with the
Commission, corporations listed with an
exchange or with assets of at least Fifty
million pesos (P50,000,000.00) and having
two hundred (200) or more holders of shares,
each holding at least one hundred (100)
shares of a class of its equity shares;
(b) Banks and quasi-banks, NSSLAs, pawnshops,
corporations engaged in money service
business, preneed, trust and insurance
companies, and other financial
intermediaries; and
(c) Other corporations engaged in businesses vested
with public interest similar to the above, as
may be determined by the Commission, after
taking into account relevant factors which are
germane to the objective and purpose of
requiring the election of an independent
director, such as the extent of minority
ownership, type of financial products or
securities issued or offered to investors,
public interest involved in the nature of
business operations, and other analogous
factors.
An independent director is a person who, apart from
shareholdings and fees received from the
corporation, is independent of management
and free from any business or other
relationship which could, or could reasonably
be perceived to materially interfere with the
exercise of independent judgment in carrying
out the responsibilities as a director.
Independent directors must be elected by the
shareholders present or entitled to vote in
absentia during the election of directors.
Independent directors shall be subject to rules
and regulations governing their
qualifications, disqualifications, voting
requirements, duration of term and term
limit, maximum number of board
memberships and other requirements that the
Commission will prescribe to strengthen their
independence and align with international
best practices. aDSIHc
SECTION 23. Election of Directors or Trustees. — Except when
the exclusive right is reserved for holders of founders' shares under
Section 7 of this Code, each stockholder or member shall have the right
to nominate any director or trustee who possesses all of the
qualifications and none of the disqualifications set forth in this Code.
At all elections of directors or trustees, there must be present,
either in person or through a representative authorized to act by
written proxy, the owners of majority of the outstanding capital stock,
or if there be no capital stock, a majority of the members entitled to
vote. When so authorized in the bylaws or by a majority of the board of
directors, the stockholders or members may also vote through remote
communication or in absentia:Provided,That the right to vote through
such modes may be exercised in corporations vested with public
interest, notwithstanding the absence of a provision in the bylaws of
such corporations.
A stockholder or member who participates through remote
communication or in absentia,shall be deemed present for purposes of
quorum.
The election must be by ballot if requested by any voting
stockholder or member.
In stock corporations, stockholders entitled to vote shall have
the right to vote the number of shares of stock standing in their own
names in the stock books of the corporation at the time fixed in the
bylaws or where the bylaws are silent, at the time of the election. The
said stockholder may: (a) vote such number of shares for as many
persons as there are directors to be elected; (b) cumulate said shares
and give one (1) candidate as many votes as the number of directors to
be elected multiplied by the number of the shares owned; or (c)
distribute them on the same principle among as many candidates as
may be seen fit: Provided,That the total number of votes cast shall not
exceed the number of shares owned by the stockholders as shown in
the books of the corporation multiplied by the whole number of
directors to be elected: Provided, however,That no delinquent stock shall
be voted. Unless otherwise provided in the articles of incorporation or
in the bylaws, members of nonstock corporations may cast as many
votes as there are trustees to be elected but may not cast more than one
(1) vote for one (1) candidate. Nominees for directors or trustees
receiving the highest number of votes shall be declared elected.
If no election is held, or the owners of majority of the
outstanding capital stock or majority of the members entitled to vote
are not present in person, by proxy, or through remote communication
or not voting in absentia at the meeting, such meeting may be adjourned
and the corporation shall proceed in accordance with Section 25 of this
Code.
The directors or trustees elected shall perform their duties as
prescribed by law, rules of good corporate governance, and bylaws of
the corporation.
SECTION 24. Corporate Officers. — Immediately after their
election, the directors of a corporation must formally organize and
elect: (a) a president, who must be a director; (b) a treasurer, who must
be a resident; (c) a secretary, who must be a citizen and resident of the
Philippines; and (d) such other officers as may be provided in the
bylaws. If the corporation is vested with public interest, the board shall
also elect a compliance officer. The same person may hold two (2) or
more positions concurrently, except that no one shall act as president
and secretary or as president and treasurer at the same time, unless
otherwise allowed in this Code.
The officers shall manage the corporation and perform such
duties as may be provided in the bylaws and/or as resolved by the
board of directors.
SECTION 25. Report of Election of Directors, Trustees and Officers,
Non-Holding of Election and Cessation from Office.— Within thirty (30)
days after the election of the directors, trustees and officers of the
corporation, the secretary, or any other officer of the corporation, shall
submit to the Commission, the names, nationalities, shareholdings, and
residence addresses of the directors, trustees and officers elected.
The non-holding of elections and the reasons therefor shall be
reported to the Commission within thirty (30) days from the date of the
scheduled election. The report shall specify a new date for the election,
which shall not be later than sixty (60) days from the scheduled date.
If no new date has been designated, or if the rescheduled
election is likewise not held, the Commission may, upon the application
of a stockholder, member, director or trustee, and after verification of
the unjustified non-holding of the election, summarily order that an
election be held. The Commission shall have the power to issue such
orders as may be appropriate, including orders directing the issuance of
a notice stating the time and place of the election, designated presiding
officer, and the record date or dates for the determination of
stockholders or members entitled to vote.
Notwithstanding any provision of the articles of incorporation
or bylaws to the contrary, the shares of stock or membership
represented at such meeting and entitled to vote shall constitute a
quorum for purposes of conducting an election under this section.
Should a director, trustee or officer die, resign or in any
manner cease to hold office, the secretary, or the director, trustee or
officer of the corporation, shall, within seven (7) days from knowledge
thereof, report in writing such fact to the Commission.
SECTION 26. Disqualification of Directors, Trustees or Officers.—
A person shall be disqualified from being a director, trustee or officer of
any corporation if, within five (5) years prior to the election or
appointment as such, the person was:
(a) Convicted by final judgment:
(1) Of an offense punishable by imprisonment
for a period exceeding six (6) years;
(2) For violating this Code; and
(3) For violating Republic Act No. 8799,
otherwise known as "The Securities
Regulation Code";
(b) Found administratively liable for any offense
involving fraudulent acts; and
(c) By a foreign court or equivalent foreign regulatory
authority for acts, violations or misconduct
similar to those enumerated in paragraphs (a)
and (b) above.
The foregoing is without prejudice to qualifications or other
disqualifications, which the Commission, the primary regulatory
agency, or the Philippine Competition Commission may impose in its
promotion of good corporate governance or as a sanction in its
administrative proceedings.
SECTION 27. Removal of Directors or Trustees.— Any director or
trustee of a corporation may be removed from office by a vote of the
stockholders holding or representing at least two-thirds (2/3) of the
outstanding capital stock, or in a nonstock corporation, by a vote of at
least two-thirds (2/3) of the members entitled to vote: Provided, That
such removal shall take place either at a regular meeting of the
corporation or at a special meeting called for the purpose, and in either
case, after previous notice to stockholders or members of the
corporation of the intention to propose such removal at the meeting. A
special meeting of the stockholders or members for the purpose of
removing any director or trustee must be called by the secretary on
order of the president, or upon written demand of the stockholders
representing or holding at least a majority of the outstanding capital
stock, or a majority of the members entitled to vote. If there is no
secretary, or if the secretary, despite demand, fails or refuses to call the
special meeting or to give notice thereof, the stockholder or member of
the corporation signing the demand may call for the meeting by
directly addressing the stockholders or members. Notice of the time
and place of such meeting, as well as of the intention to propose such
removal, must be given by publication or by written notice prescribed
in this Code. Removal may be with or without cause: Provided, That
removal without cause may not be used to deprive minority
stockholders or members of the right of representation to which they
may be entitled under Section 23 of this Code.
 The Commission shall, motu proprio or upon verified
complaint, and after due notice and hearing, order the removal of a
director or trustee elected despite the disqualification, or whose
disqualification arose or is discovered subsequent to an election. The
removal of a disqualified director shall be without prejudice to other
sanctions that the Commission may impose on the board of directors or
trustees who, with knowledge of the disqualification, failed to remove
such director or trustee.
SECTION 28. Vacancies in the Office of Director or Trustee;
Emergency Board.— Any vacancy occurring in the board of directors or
trustees other than by removal or by expiration of term may be filled by
the vote of at least a majority of the remaining directors or trustees, if
still constituting a quorum; otherwise, said vacancies must be filled by
the stockholders or members in a regular or special meeting called for
that purpose.
When the vacancy is due to term expiration, the election shall
be held no later than the day of such expiration at a meeting called for
that purpose. When the vacancy arises as a result of removal by the
stockholders or members, the election may be held on the same day of
the meeting authorizing the removal and this fact must be so stated in
the agenda and notice of said meeting. In all other cases, the election
must be held no later than forty-five (45) days from the time the
vacancy arose. A director or trustee elected to fill a vacancy shall be
referred to as replacement director or trustee and shall serve only for
the unexpired term of the predecessor in office.
However, when the vacancy prevents the remaining directors
from constituting a quorum and emergency action is required to
prevent grave, substantial, and irreparable loss or damage to the
corporation, the vacancy may be temporarily filled from among the
officers of the corporation by unanimous vote of the remaining
directors or trustees. The action by the designated director or trustee
shall be limited to the emergency action necessary, and the term shall
cease within a reasonable time from the termination of the emergency
or upon election of the replacement director or trustee, whichever
comes earlier. The corporation must notify the Commission within
three (3) days from the creation of the emergency board, stating therein
the reason for its creation.
Any directorship or trusteeship to be filled by reason of an
increase in the number of directors or trustees shall be filled only by an
election at a regular or at a special meeting of stockholders or members
duly called for the purpose, or in the same meeting authorizing the
increase of directors or trustees if so stated in the notice of the meeting.
In all elections to fill vacancies under this section, the
procedure set forth in Sections 23 and 25 of this Code shall apply.
SECTION 29. Compensation of Directors or Trustees.— In the
absence of any provision in the bylaws fixing their compensation, the
directors or trustees shall not receive any compensation in their
capacity as such, except for reasonable per diems: Provided,
however,That the stockholders representing at least a majority of the
outstanding capital stock or majority of the members may grant
directors or trustees with compensation and approve the amount
thereof at a regular or special meeting.
In no case shall the total yearly compensation of directors
exceed ten percent (10%) of the net income before income tax of the
corporation during the preceding year.
Directors or trustees shall not participate in the determination
of their own per diems or compensation.
Corporations vested with public interest shall submit to their
shareholders and the Commission, an annual report of the total
compensation of each of their directors or trustees.
SECTION 30. Liability of Directors, Trustees or Officers.—
Directors or trustees who willfully and knowingly vote for or assent to
patently unlawful acts of the corporation or who are guilty of gross
negligence or bad faith in directing the affairs of the corporation or
acquire any personal or pecuniary interest in conflict with their duty as
such directors or trustees shall be liable jointly and severally for all
damages resulting therefrom suffered by the corporation, its
stockholders or members and other persons.
A director, trustee or officer shall not attempt to acquire, or
acquire any interest adverse to the corporation in respect of any matter
which has been reposed in them in confidence, and upon which, equity
imposes a disability upon themselves to deal in their own behalf;
otherwise, the said director, trustee or officer shall be liable as a trustee
for the corporation and must account for the profits which otherwise
would have accrued to the corporation.
SECTION 31. Dealings of Directors, Trustees or Officers with the
Corporation.— A contract of the corporation with one (1) or more of its
directors, trustees, officers or their spouses and relatives within the fourth civil
degree of consanguinity or affinity is voidable, at the option of such
corporation, unless all the following conditions are present:
(a) The presence of such director or trustee in the
board meeting in which the contract was
approved was not necessary to constitute a
quorum for such meeting;
(b) The vote of such director or trustee was not
necessary for the approval of the contract;
(c) The contract is fair and reasonable under the
circumstances;
(d) In case of corporations vested with public interest,
material contracts are approved by at least
two-thirds (2/3) of the entire membership of
the board, with at least a majority of the
 independent directors voting to approve the any resolution of the board which by its express terms is not amendable
material contract; and ETHIDa or repealable; and (e) distribution of cash dividends to the
shareholders.
(e) In case of an officer, the contract has been
previously authorized by the board of The board of directors may create special committees of
directors. temporary or permanent nature and determine the members' term,
composition, compensation, powers, and responsibilities.
Where any of the first three (3) conditions set forth
in the preceding paragraph is absent, in the
case of a contract with a director or trustee,
such contract may be ratified by the vote of
the stockholders representing at least
two-thirds (2/3) of the outstanding capital
stock or of at least two-thirds (2/3) of the
members in a meeting called for the purpose:
Provided,That full disclosure of the adverse
interest of the directors or trustees involved is
made at such meeting and the contract is fair
and reasonable under the circumstances.
SECTION 32. Contracts Between Corporations with Interlocking
Directors.— Except in cases of fraud, and provided the contract is fair
and reasonable under the circumstances, a contract between two (2) or
more corporations having interlocking directors shall not be
invalidated on that ground alone: Provided,That if the interest of the
interlocking director in one (1) corporation is substantial and the
interest in the other corporation or corporations is merely nominal, the
contract shall be subject to the provisions of the preceding section
insofar as the latter corporation or corporations are concerned.
Stockholdings exceeding twenty percent (20%) of the
outstanding capital stock shall be considered substantial for purposes
of interlocking directors.
SECTION 33. Disloyalty of a Director. — Where a director, by
virtue of such office, acquires a business opportunity which should
belong to the corporation, thereby obtaining profits to the prejudice of
such corporation, the director must account for and refund to the latter
all such profits, unless the act has been ratified by a vote of the
stockholders owning or representing at least two-thirds (2/3) of the
outstanding capital stock. This provision shall be applicable,
notwithstanding the fact that the director risked one's own funds in the
venture.
SECTION 34. Executive, Management, and Other Special
Committees.— If the bylaws so provide, the board may create an
executive committee composed of at least three (3) directors. Said
committee may act, by majority vote of all its members, on such specific
matters within the competence of the board, as may be delegated to it
in the bylaws or by majority vote of the board, except with respect to
the: (a) approval of any action for which shareholders' approval is also
required; (b) filling of vacancies in the board; (c) amendment or repeal
of bylaws or the adoption of new bylaws; (d) amendment or repeal of
 TITLE IV
Powers of Corporations
SECTION 35. Corporate Powers and Capacity. — Every
corporation incorporated under this Code has the power and capacity:
(a) To sue and be sued in its corporate name;
(b) To have perpetual existence unless the certificate of
incorporation provides otherwise;
(c) To adopt and use a corporate seal;
(d) To amend its articles of incorporation in
accordance with the provisions of this Code;
(e) To adopt bylaws, not contrary to law, morals or
public policy, and to amend or repeal the
same in accordance with this Code;
(f) In case of stock corporations, to issue or sell stocks
to subscribers and to sell treasury stocks in
accordance with the provisions of this Code;
and to admit members to the corporation if it
be a nonstock corporation;
(g) To purchase, receive, take or grant, hold, convey,
sell, lease, pledge, mortgage, and otherwise
deal with such real and personal property,
including securities and bonds of other
corporations, as the transaction of the lawful
business of the corporation may reasonably
and necessarily require, subject to the
limitations prescribed by law and the
Constitution;
(h) To enter into a partnership, joint venture, merger,
consolidation, or any other commercial
agreement with natural and juridical persons;
(i) To make reasonable donations, including those for
the public welfare or for hospital, charitable,
cultural, scientific, civic, or similar purposes:
Provided,That no foreign corporation shall
give donations in aid of any political party or
candidate or for purposes of partisan political
activity;
(j) To establish pension, retirement, and other plans for
the benefit of its directors, trustees, officers,
and employees; and
(k) To exercise such other powers as may be essential
or necessary to carry out its purpose or
purposes as stated in the articles of
incorporation.
SECTION 36. Power to Extend or Shorten Corporate Term. — A
private corporation may extend or shorten its term as stated in the
articles of incorporation when approved by a majority vote of the board
of directors or trustees, and ratified at a meeting by the stockholders or
members representing at least two-thirds (2/3) of the outstanding
capital stock or of its members. Written notice of the proposed action
and the time and place of the meeting shall be sent to stockholders or
members at their respective place of residence as shown in the books of
the corporation, and must be deposited to the addressee in the post
office with postage prepaid, served personally, or when allowed in the
bylaws or done with the consent of the stockholder, sent electronically
in accordance with the rules and regulations of the Commission on the
use of electronic data messages. In case of extension of corporate term,
a dissenting stockholder may exercise the right of appraisal under the
conditions provided in this Code.
SECTION 37. Power to Increase or Decrease Capital Stock; Incur,
Create or Increase Bonded Indebtedness. — No corporation shall increase
or decrease its capital stock or incur, create or increase any bonded
indebtedness unless approved by a majority vote of the board of
directors and by two-thirds (2/3) of the outstanding capital stock at a
stockholders' meeting duly called for the purpose. Written notice of the
time and place of the stockholders' meeting and the purpose for said
meeting must be sent to the stockholders at their places of residence as
shown in the books of the corporation and served on the stockholders
personally, or through electronic means recognized in the corporation's
bylaws and/or the Commission's rules as a valid mode for service of
notices.
A certificate must be signed by a majority of the directors of
the corporation and countersigned by the chairperson and secretary of
the stockholders' meeting, setting forth:
(a) That the requirements of this section have been
complied with;
(b) The amount of the increase or decrease of the
capital stock;
(c) In case of an increase of the capital stock, the
amount of capital stock or number of shares
of no-par stock thereof actually subscribed,
the names, nationalities and addresses of the
persons subscribing, the amount of capital
stock or number of no-par stock subscribed
by each, and the amount paid by each on the
subscription in cash or property, or the
amount of capital stock or number of shares
of no-par stock allotted to each stockholder if
 such increase is for the purpose of making
effective stock dividend therefor authorized;
(d) Any bonded indebtedness to be incurred, created
or increased;
(e) The amount of stock represented at the meeting;
and
(f) The vote authorizing the increase or decrease of the
capital stock, or the incurring, creating or
increasing of any bonded indebtedness.
Any increase or decrease in the capital stock or the incurring,
creating or increasing of any bonded indebtedness shall require prior
approval of the Commission, and where appropriate, of the Philippine
Competition Commission. The application with the Commission shall
be made within six (6) months from the date of approval of the board of
directors and stockholders, which period may be extended for
justifiable reasons.
Copies of the certificate shall be kept on file in the office of the
corporation and filed with the Commission and attached to the original
articles of incorporation. After approval by the Commission and the
issuance by the Commission of its certificate of filing, the capital stock
shall be deemed increased or decreased and the incurring, creating or
increasing of any bonded indebtedness authorized, as the certificate of
filing may declare: Provided,That the Commission shall not accept for
filing any certificate of increase of capital stock unless accompanied by
a sworn statement of the treasurer of the corporation lawfully holding
office at the time of the filing of the certificate, showing that at least
twenty-five percent (25%) of the increase in capital stock has been
subscribed and that at least twenty-five percent (25%) of the amount
subscribed has been paid in actual cash to the corporation or that
property, the valuation of which is equal to twenty-five percent (25%)
of the subscription, has been transferred to the corporation: Provided,
further,That no decrease in capital stock shall be approved by the
Commission if its effect shall prejudice the rights of corporate creditors.
Nonstock corporations may incur, create or increase bonded
indebtedness when approved by a majority of the board of trustees and
of at least two-thirds (2/3) of the members in a meeting duly called for
the purpose.
Bonds issued by a corporation shall be registered with the
Commission, which shall have the authority to determine the
sufficiency of the terms thereof.
SECTION 38. Power to Deny Preemptive Right.— All
stockholders of a stock corporation shall enjoy preemptive right to
subscribe to all issues or disposition of shares of any class, in
proportion to their respective shareholdings, unless such right is denied
by the articles of incorporation or an amendment thereto: Provided,That
such preemptive right shall not extend to shares issued in compliance
with laws requiring stock offerings or minimum stock ownership by
the public; or to shares issued in good faith with the approval of the
stockholders representing two-thirds (2/3) of the outstanding capital
stock, in exchange for property needed for corporate purposes or in
payment of a previously contracted debt.
SECTION 39. Sale or Other Disposition of Assets. — Subject to
the provisions of Republic Act No. 10667, otherwise known as the
"Philippine Competition Act," and other related laws, a corporation
may, by a majority vote of its board of directors or trustees, sell, lease,
exchange, mortgage, pledge, or otherwise dispose of its property and
assets, upon such terms and conditions and for such consideration,
which may be money, stocks, bonds, or other instruments for the
payment of money or other property or consideration, as its board of
directors or trustees may deem expedient. cSEDTC
A sale of all or substantially all of the corporation's properties
and assets, including its goodwill, must be authorized by the vote of
the stockholders representing at least two-thirds (2/3) of the
outstanding capital stock, or at least two-thirds (2/3) of the members,
in a stockholders' or members' meeting duly called for the purpose.
In nonstock corporations where there are no members with
voting rights, the vote of at least a majority of the trustees in office will
be sufficient authorization for the corporation to enter into any
transaction authorized by this section.
The determination of whether or not the sale involves all or
substantially all of the corporation's properties and assets must be
computed based on its net asset value, as shown in its latest financial
statements. A sale or other disposition shall be deemed to cover
substantially all the corporate property and assets if thereby the
corporation would be rendered incapable of continuing the business or
accomplishing the purpose for which it was incorporated.
Written notice of the proposed action and of the time and place
for the meeting shall be addressed to stockholders or members at their
places of residence as shown in the books of the corporation and
deposited to the addressee in the post office with postage prepaid,
served personally, or when allowed by the bylaws or done with the
consent of the stockholder, sent electronically: Provided, That any
dissenting stockholder may exercise the right of appraisal under the
conditions provided in this Code.
After such authorization or approval by the stockholders or
members, the board of directors or trustees may, nevertheless, in its
discretion, abandon such sale, lease, exchange, mortgage, pledge, or
other disposition of property and assets, subject to the rights of third
parties under any contract relating thereto, without further action or
approval by the stockholders or members.
Nothing in this section is intended to restrict the power of any
corporation, without the authorization by the stockholders or members,
to sell, lease, exchange, mortgage, pledge, or otherwise dispose of any
of its property and assets if the same is necessary in the usual and
regular course of business of the corporation or if the proceeds of the
sale or other disposition of such property and assets shall be
appropriated for the conduct of its remaining business.
SECTION 40. Power to Acquire Own Shares.— Provided that the
corporation has unrestricted retained earnings in its books to cover the
shares to be purchased or acquired, a stock corporation shall have the
power to purchase or acquire its own shares for a legitimate corporate
purpose or purposes, including the following cases:
(a) To eliminate fractional shares arising out of stock
dividends;
(b) To collect or compromise an indebtedness to the
corporation, arising out of unpaid
subscription, in a delinquency sale, and to
purchase delinquent shares sold during said
sale; and
(c) To pay dissenting or withdrawing stockholders
entitled to payment for their shares under the
provisions of this Code.
SECTION 41. Power to Invest Corporate Funds in Another
Corporation or Business or for Any Other Purpose. — Subject to the
provisions of this Code, a private corporation may invest its funds in
any other corporation, business, or for any purpose other than the
primary purpose for which it was organized, when approved by a
majority of the board of directors or trustees and ratified by the
stockholders representing at least two-thirds (2/3) of the outstanding
capital stock, or by at least two-thirds (2/3) of the members in the case
of nonstock corporations, at a meeting duly called for the purpose.
Notice of the proposed investment and the time and place of the
meeting shall be addressed to each stockholder or member at the place
of residence as shown in the books of the corporation and deposited to
the addressee in the post office with postage prepaid, served
personally, or sent electronically in accordance with the rules and
regulations of the Commission on the use of electronic data message,
when allowed by the bylaws or done with the consent of the
stockholders: Provided, That any dissenting stockholder shall have
appraisal right as provided in this Code: Provided, however,That where
the investment by the corporation is reasonably necessary to
accomplish its primary purpose as stated in the articles of
incorporation, the approval of the stockholders or members shall not be
necessary.
SECTION 42. Power to Declare Dividends.— The board of
directors of a stock corporation may declare dividends out of the
unrestricted retained earnings which shall be payable in cash, property,
or in stock to all stockholders on the basis of outstanding stock held by
them: Provided,That any cash dividends due on delinquent stock shall
first be applied to the unpaid balance on the subscription plus costs and
expenses, while stock dividends shall be withheld from the delinquent
stockholders until their unpaid subscription is fully paid: Provided,
further,That no stock dividend shall be issued without the approval of
stockholders representing at least two-thirds (2/3) of the outstanding
capital stock at a regular or special meeting duly called for the purpose.
Stock corporations are prohibited from retaining surplus
profits in excess of one hundred percent (100%) of their paid-in capital
stock, except: (a) when justified by definite corporate expansion
projects or programs approved by the board of directors; or (b) when
the corporation is prohibited under any loan agreement with financial
institutions or creditors, whether local or foreign, from declaring
dividends without their consent, and such consent has not yet been
secured; or (c) when it can be clearly shown that such retention is
necessary under special circumstances obtaining in the corporation,
such as when there is need for special reserve for probable
contingencies.
SECTION 43. Power to Enter into Management Contract.— No
corporation shall conclude a management contract with another
corporation unless such contract is approved by the board of directors
and by stockholders owning at least the majority of the outstanding
capital stock, or by at least a majority of the members in the case of a
nonstock corporation, of both the managing and the managed
corporation, at a meeting duly called for the purpose: Provided,That (a)
where a stockholder or stockholders representing the same interest of
both the managing and the managed corporations own or control more
than one-third (1/3) of the total outstanding capital stock entitled to
vote of the managing corporation; or (b) where a majority of the
members of the board of directors of the managing corporation also
constitute a majority of the members of the board of directors of the
managed corporation, then the management contract must be
approved by the stockholders of the managed corporation owning at
least two-thirds (2/3) of the total outstanding capital stock entitled to
vote, or by at least two-thirds (2/3) of the members in the case of a
nonstock corporation.
These shall apply to any contract whereby a corporation
undertakes to manage or operate all or substantially all of the business
of another corporation, whether such contracts are called service
contracts, operating agreements or otherwise: Provided, however,That
such service contracts or operating agreements which relate to the
exploration, development, exploitation or utilization of natural
resources may be entered into for such periods as may be provided by
pertinent laws or regulations.
No management contract shall be entered into for a period
longer than five (5) years for any one (1) term.
SECTION 44. Ultra Vires Acts of Corporations. — No corporation
shall possess or exercise corporate powers other than those conferred
by this Code or by its articles of incorporation and except as necessary
or incidental to the exercise of the powers conferred.
 TITLE V
Bylaws
SECTION 45. Adoption of Bylaws.— For the adoption of bylaws
by the corporation, the affirmative vote of the stockholders
representing at least a majority of the outstanding capital stock, or of at
least a majority of the members in case of nonstock corporations, shall
be necessary. The bylaws shall be signed by the stockholders or
members voting for them and shall be kept in the principal office of the
corporation, subject to the inspection of the stockholders or members
during office hours. A copy thereof, duly certified by a majority of the
directors or trustees and countersigned by the secretary of the
corporation, shall be filed with the Commission and attached to the
original articles of incorporation.
Notwithstanding the provisions of the preceding paragraph,
bylaws may be adopted and filed prior to incorporation; in such case,
such bylaws shall be approved and signed by all the incorporators and
submitted to the Commission, together with the articles of
incorporation.
In all cases, bylaws shall be effective only upon the issuance by
the Commission of a certification that the bylaws are in accordance
with this Code.
The Commission shall not accept for filing the bylaws or any
amendment thereto of any bank, banking institution, building and loan
association, trust company, insurance company, public utility,
educational institution, or other special corporations governed by
special laws, unless accompanied by a certificate of the appropriate
government agency to the effect that such bylaws or amendments are in
accordance with law.
SECTION 46. Contents of Bylaws.— A private corporation may
provide the following in its bylaws:
(a) The time, place and manner of calling and
conducting regular or special meetings of the
directors or trustees;
(b) The time and manner of calling and conducting
regular or special meetings and mode of
notifying the stockholders or members
thereof;
(c) The required quorum in meetings of stockholders
or members and the manner of voting
therein;
(d) The modes by which a stockholder, member,
director, or trustee may attend meetings and
cast their votes;
(e) The form for proxies of stockholders and members
and the manner of voting them;
(f) The directors' or trustees' qualifications, duties and
responsibilities, the guidelines for setting the
compensation of directors or trustees and
officers, and the maximum number of other
board representations that an independent
director or trustee may have which shall, in
no case, be more than the number prescribed
by the Commission;
(g) The time for holding the annual election of
directors or trustees and the mode or manner
of giving notice thereof;
(h) The manner of election or appointment and the
term of office of all officers other than
directors or trustees;
(i) The penalties for violation of the bylaws;
(j) In the case of stock corporations, the manner of
issuing stock certificates; and
(k) Such other matters as may be necessary for the
proper or convenient transaction of its
corporate affairs for the promotion of good
governance and anti-graft and corruption
measures.
An arbitration agreement may be provided in the
bylaws pursuant to Section 181 of this Code.
SECTION 47. Amendment to Bylaws.— A majority of the board
of directors or trustees, and the owners of at least a majority of the
outstanding capital stock, or at least a majority of the members of a
nonstock corporation, at a regular or special meeting duly called for the
purpose, may amend or repeal the bylaws or adopt new bylaws. The
owners of two-thirds (2/3) of the outstanding capital stock or
two-thirds (2/3) of the members in a nonstock corporation may
delegate to the board of directors or trustees the power to amend or
repeal the bylaws or adopt new bylaws: Provided,That any power
delegated to the board of directors or trustees to amend or repeal the
bylaws or adopt new bylaws shall be considered as revoked whenever
stockholders owning or representing a majority of the outstanding
capital stock or majority of the members shall so vote at a regular or
special meeting.
Whenever the bylaws are amended or new bylaws are
adopted, the corporation shall file with the Commission such amended
or new bylaws and, if applicable, the stockholders' or members'
resolution authorizing the delegation of the power to amend and/or
adopt new bylaws, duly certified under oath by the corporate secretary
and a majority of the directors or trustees. SDAaTC
 The amended or new bylaws shall only be effective upon the
issuance by the Commission of a certification that the same is in
accordance with this Code and other relevant laws.
TITLE VI
Meetings
SECTION 48. Kinds of Meetings.— Meetings of directors,
trustees, stockholders, or members may be regular or special.
SECTION 49. Regular and Special Meetings of Stockholders or
Members.— Regular meetings of stockholders or members shall be held
annually on a date fixed in the bylaws, or if not so fixed, on any date
after April 15 of every year as determined by the board of directors or
trustees: Provided,That written notice of regular meetings shall be sent
to all stockholders or members of record at least twenty-one (21) days
prior to the meeting, unless a different period is required in the bylaws,
law, or regulation: Provided, further,That written notice of regular
meetings may be sent to all stockholders or members of record through
electronic mail or such other manner as the Commission shall allow
under its guidelines.
At each regular meeting of stockholders or members, the board
of directors or trustees shall endeavor to present to stockholders or
members the following:
(a) The minutes of the most recent regular meeting
which shall include, among others:
(1) A description of the voting and vote
tabulation procedures used in the
previous meeting;
(2) A description of the opportunity given to
stockholders or members to ask
questions and a record of the
questions asked and answers given;
(3) The matters discussed and resolutions
reached;
(4) A record of the voting results for each
agenda item;
(5) A list of the directors or trustees, officers
and stockholders or members who
attended the meeting; and
(6) Such other items that the Commission
may require in the interest of good
corporate governance and the
protection of minority stockholders;
(b) A members' list for nonstock corporations and, for
stock corporations, material information on
the current stockholders, and their voting
rights;
(c) A detailed, descriptive, balanced and
comprehensible assessment of the
corporation's performance, which shall
include information on any material change
in the corporation's business, strategy, and
other affairs;
(d) A financial report for the preceding year, which
shall include financial statements duly signed
and certified in accordance with this Code
and the rules the Commission may prescribe,
a statement on the adequacy of the
corporation's internal controls or risk
management systems, and a statement of all
external audit and non-audit fees;
(e) An explanation of the dividend policy and the fact
of payment of dividends or the reasons for
nonpayment thereof;
(f) Director or trustee profiles which shall include,
among others, their qualifications and
relevant experience, length of service in the
corporation, trainings and continuing
education attended, and their board
representations in other corporations;
(g) A director or trustee attendance report, indicating
the attendance of each director or trustee at
each of the meetings of the board and its
committees and in regular or special
stockholder meetings;
(h) Appraisals and performance reports for the board
and the criteria and procedure for assessment;
(i) A director or trustee compensation report prepared
in accordance with this Code and the rules
the Commission may prescribe;
(j) Director disclosures on self-dealings and related
party transactions; and/or
(k) The profiles of directors nominated or seeking
election or reelection.
A director, trustee, stockholder, or member may
propose any other matter for inclusion in the
agenda at any regular meeting of
stockholders or members.
Special meetings of stockholders or members shall
be held at any time deemed necessary or as
 provided in the bylaws: Provided, so authorized in the bylaws, through remote
however,That at least one (1) week written communication or in absentia. The
notice shall be sent to all stockholders or Commission shall issue the rules and
members, unless a different period is regulations governing participation and
provided in the bylaws, law or regulation. voting through remote communication or in
absentia,taking into account the company's
A stockholder or member may propose the holding
scale, number of shareholders or members,
of a special meeting and items to be included
structure, and other factors consistent with
in the agenda.
the protection and promotion of shareholders'
Notice of any meeting may be waived, expressly or or members' meetings.
impliedly, by any stockholder or member:
SECTION 50. Place and Time of Meetings of Stockholders or
Provided,That general waivers of notice in the
Members.— Stockholders' or members' meetings, whether regular or
articles of incorporation or the bylaws shall
special, shall be held in the principal office of the corporation as set
not be allowed; Provided, further,That
forth in the articles of incorporation, or, if not practicable, in the city or
attendance at a meeting shall constitute a
municipality where the principal office of the corporation is located:
waiver of notice of such meeting, except
Provided,That any city or municipality in Metro Manila, Metro Cebu,
when the person attends a meeting for the
Metro Davao, and other Metropolitan areas shall, for purposes of this
express purpose of objecting to the
section, be considered a city or municipality.
transaction of any business because the
meeting is not lawfully called or convened. Notice of meetings shall be sent through the means of
communication provided in the bylaws, which notice shall state the
Whenever for any cause, there is no person
time, place and purpose of the meetings.
authorized or the person authorized unjustly
refuses to call a meeting, the Commission, Each notice of meeting shall further be accompanied by the
upon petition of a stockholder or member on following:
a showing of good cause therefor, may issue
(a) The agenda for the meeting;
an order, directing the petitioning stockholder
or member to call a meeting of the (b) A proxy form which shall be submitted to the
corporation by giving proper notice required corporate secretary within a reasonable time
by this Code or the bylaws. The petitioning prior to the meeting;
stockholder or member shall preside thereat
(c) When attendance, participation, and voting are
until at least a majority of the stockholders or
allowed by remote communication or in
members present have chosen from among
absentia,the requirements and procedures to
themselves, a presiding officer.
be followed when a stockholder or member
Unless the bylaws provide for a longer period, the elects either option; and
stock and transfer book or membership book
(d) When the meeting is for the election of directors or
shall be closed at least twenty (20) days for
trustees, the requirements and procedure for
regular meetings and seven (7) days for
nomination and election.
special meetings before the scheduled date of
the meeting. All proceedings and any business transacted at a
meeting of the stockholders or members, if
In case of postponement of stockholders' or
within the powers or authority of the
members' regular meetings, written notice
corporation, shall be valid even if the meeting
thereof and the reason therefor shall be sent
is improperly held or called: Provided,That all
to all stockholders or members of record at
the stockholders or members of the
least two (2) weeks prior to the date of the
corporation are present or duly represented at
meeting, unless a different period is required
the meeting and not one of them expressly
under the bylaws, law or regulation.
states at the beginning of the meeting that the
The right to vote of stockholders or members may be purpose of their attendance is to object to the
exercised in person, through a proxy, or when
 transaction of any business because the
meeting is not lawfully called or convened.
SECTION 51. Quorum in Meetings. — Unless otherwise
provided in this Code or in the bylaws, a quorum shall consist of the
stockholders representing a majority of the outstanding capital stock or
a majority of the members in the case of nonstock corporations.
SECTION 52. Regular and Special Meetings of Directors or
Trustees; Quorum.— Unless the articles of incorporation or the bylaws
provides for a greater majority, a majority of the directors or trustees as
stated in the articles of incorporation shall constitute a quorum to
transact corporate business, and every decision reached by at least a
majority of the directors or trustees constituting a quorum, except for
the election of officers which shall require the vote of a majority of all
the members of the board, shall be valid as a corporate act.
Regular meetings of the board of directors or trustees of every
corporation shall be held monthly, unless the bylaws provide
otherwise.
Special meetings of the board of directors or trustees may be
held at any time upon the call of the president or as provided in the
bylaws.
Meetings of directors or trustees of corporations may be held
anywhere in or outside of the Philippines, unless the bylaws provide
otherwise. Notice of regular or special meetings stating the date, time
and place of the meeting must be sent to every director or trustee at
least two (2) days prior to the scheduled meeting, unless a longer time
is provided in the bylaws. A director or trustee may waive this
requirement, either expressly or impliedly.
Directors or trustees who cannot physically attend or vote at
board meetings can participate and vote through remote
communication such as videoconferencing, teleconferencing, or other
alternative modes of communication that allow them reasonable
opportunities to participate. Directors or trustees cannot attend or vote
by proxy at board meetings.
A director or trustee who has a potential interest in any related
party transaction must recuse from voting on the approval of the
related party transaction without prejudice to compliance with the
requirements of Section 31 of this Code.
SECTION 53. Who Shall Preside at Meetings.— The chairman or,
in his absence, the president shall preside at all meetings of the
directors or trustees as well as of the stockholders or members, unless
the bylaws provide otherwise.
SECTION 54. Right to Vote of Secured Creditors and
Administrators.— In case a stockholder grants security interest in his or
her shares in stock corporations, the stockholder-grantor shall have the
right to attend and vote at meetings of stockholders, unless the secured
creditor is expressly given by the stockholder-grantor such right in
writing which is recorded in the appropriate corporate books.
Executors, administrators, receivers, and other legal
representatives duly appointed by the court may attend and vote in
behalf of the stockholders or members without need of any written
proxy.
SECTION 55. Voting in Case of Joint Ownership of Stock.— The
consent of all the co-owners shall be necessary in voting shares of stock
owned jointly by two (2) or more persons, unless there is a written
proxy, signed by all the co-owners, authorizing one (1) or some of them
or any other person to vote such share or shares: Provided,That when
the shares are owned in an "and/or" capacity by the holders thereof,
any one of the joint owners can vote said shares or appoint a proxy
therefor.
SECTION 56. Voting Right for Treasury Shares.— Treasury shares
shall have no voting right as long as such shares remain in the Treasury.
acEHCD
SECTION 57. Manner of Voting; Proxies.— Stockholders and
members may vote in person or by proxy in all meetings of
stockholders or members.
When so authorized in the bylaws or by a majority of the
board of directors, the stockholders or members of corporations may
also vote through remote communication or in absentia: Provided,That
the votes are received before the corporation finishes the tally of votes.
A stockholder or member who participates through remote
communication or in absentia shall be deemed present for purposes of
quorum.
The corporation shall establish the appropriate requirements
and procedures for voting through remote communication and in
absentia,taking into account the company's scale, number of
shareholders or members, structure and other factors consistent with
the basic right of corporate suffrage.
Proxies shall be in writing, signed and filed, by the stockholder
or member, in any form authorized in the bylaws and received by the
corporate secretary within a reasonable time before the scheduled
meeting. Unless otherwise provided in the proxy form, it shall be valid
only for the meeting for which it is intended. No proxy shall be valid
and effective for a period longer than five (5) years at any one time.
SECTION 58. Voting Trusts.— One or more stockholders of a
stock corporation may create a voting trust for the purpose of
conferring upon a trustee or trustees the right to vote and other rights
pertaining to the shares for a period not exceeding five (5) years at any
time: Provided,That in the case of a voting trust specifically required as a
condition in a loan agreement, said voting trust may be for a period
exceeding five (5) years but shall automatically expire upon full
payment of the loan. A voting trust agreement must be in writing and
notarized, and shall specify the terms and conditions thereof.
A certified copy of such agreement shall be filed with the
corporation and with the Commission; otherwise, the agreement is
ineffective and unenforceable. The certificate or certificates of stock
covered by the voting trust agreement shall be cancelled and new ones
shall be issued in the name of the trustee or trustees, stating that they
are issued pursuant to said agreement. The books of the corporation
shall state that the transfer in the name of the trustee or trustees is
made pursuant to the voting trust agreement.
The trustee or trustees shall execute and deliver to the
transferors, voting trust certificates, which shall be transferable in the
same manner and with the same effect as certificates of stock.
The voting trust agreement filed with the corporation shall be
subject to examination by any stockholder of the corporation in the
same manner as any other corporate book or record: Provided, That both
the trustor and the trustee or trustees may exercise the right of
inspection of all corporate books and records in accordance with the
provisions of this Code.
Any other stockholder may transfer the shares to the same
trustee or trustees upon the terms and conditions stated in the voting
trust agreement, and thereupon shall be bound by all the provisions of
said agreement.
No voting trust agreement shall be entered into for purposes of
circumventing the laws against anti-competitive agreements, abuse of
dominant position, anti-competitive mergers and acquisitions, violation
of nationality and capital requirements, or for the perpetuation of
fraud.
Unless expressly renewed, all rights granted in a voting trust
agreement shall automatically expire at the end of the agreed period.
The voting trust certificates as well as the certificates of stock in the
name of the trustee or trustees shall thereby be deemed cancelled and
new certificates of stock shall be reissued in the name of the trustors.
The voting trustee or trustees may vote by proxy or in any
manner authorized under the bylaws unless the agreement provides
otherwise.
TITLE VII
Stocks and Stockholders
SECTION 59. Subscription Contract.— Any contract for the
acquisition of unissued stock in an existing corporation or a corporation
still to be formed shall be deemed a subscription within the meaning of
this Title, notwithstanding the fact that the parties refer to it as a
purchase or some other contract.
SECTION 60. Pre-incorporation Subscription.— A subscription of
shares in a corporation still to be formed shall be irrevocable for a
period of at least six (6) months from the date of subscription, unless all
of the other subscribers consent to the revocation, or the corporation
fails to incorporate within the same period or within a longer period
stipulated in the contract of subscription. No pre-incorporation
subscription may be revoked after the articles of incorporation is
submitted to the Commission.
SECTION 61. Consideration for Stocks.— Stocks shall not be
issued for a consideration less than the par or issued price thereof.
Consideration for the issuance of stock may be:
(a) Actual cash paid to the corporation;
(b) Property, tangible or intangible, actually received
by the corporation and necessary or
convenient for its use and lawful purposes at
a fair valuation equal to the par or issued
value of the stock issued;
(c) Labor performed for or services actually rendered
to the corporation;
(d) Previously incurred indebtedness of the
corporation;
(e) Amounts transferred from unrestricted retained
earnings to stated capital;
(f) Outstanding shares exchanged for stocks in the
event of reclassification or conversion;
(g) Shares of stock in another corporation; and/or
(h) Other generally accepted form of consideration.
Where the consideration is other than actual cash, or
consists of intangible property such as
patents or copyrights, the valuation thereof
shall initially be determined by the
stockholders or the board of directors, subject
to the approval of the Commission.
Shares of stock shall not be issued in exchange for
promissory notes or future service. The same
considerations provided in this section,
insofar as applicable, may be used for the
issuance of bonds by the corporation.
The issued price of no-par value shares may be fixed
in the articles of incorporation or by the board
of directors pursuant to authority conferred
by the articles of incorporation or the bylaws,
or if not so fixed, by the stockholders
representing at least a majority of the
 outstanding capital stock at a meeting duly
called for the purpose.
SECTION 62. Certificate of Stock and Transfer of Shares. — The
capital stock of corporations shall be divided into shares for which
certificates signed by the president or vice president, countersigned by
the secretary or assistant secretary, and sealed with the seal of the
corporation shall be issued in accordance with the bylaws. Shares of
stock so issued are personal property and may be transferred by
delivery of the certificate or certificates indorsed by the owner, his
attorney-in-fact, or any other person legally authorized to make the
transfer. No transfer, however, shall be valid, except as between the
parties, until the transfer is recorded in the books of the corporation
showing the names of the parties to the transaction, the date of the
transfer, the number of the certificate or certificates, and the number of
shares transferred. The Commission may require corporations whose
securities are traded in trading markets and which can reasonably
demonstrate their capability to do so to issue their securities or shares
of stocks in uncertificated or scripless form in accordance with the rules
of the Commission.
No shares of stock against which the corporation holds any
unpaid claim shall be transferable in the books of the corporation.
SECTION 63. Issuance of Stock Certificates.— No certificate of
stock shall be issued to a subscriber until the full amount of the
subscription together with interest and expenses (in case of delinquent
shares),if any is due, has been paid.
SECTION 64. Liability of Directors for Watered Stocks.— A
director or officer of a corporation who: (a) consents to the issuance of
stocks for a consideration less than its par or issued value; (b) consents
to the issuance of stocks for a consideration other than cash, valued in
excess of its fair value; or (c) having knowledge of the insufficient
consideration, does not file a written objection with the corporate
secretary, shall be liable to the corporation or its creditors, solidarily
with the stockholder concerned for the difference between the value
received at the time of issuance of the stock and the par or issued value
of the same.
SECTION 65. Interest on Unpaid Subscriptions.— Subscribers to
stocks shall be liable to the corporation for interest on all unpaid
subscriptions from the date of subscription, if so required by and at the
rate of interest fixed in the subscription contract. If no rate of interest is
fixed in the subscription contract, the prevailing legal rate shall apply.
SECTION 66. Payment of Balance of Subscription.— Subject to the
provisions of the subscription contract, the board of directors may, at
any time, declare due and payable to the corporation unpaid
subscriptions and may collect the same or such percentage thereof, in
either case, with accrued interest, if any, as it may deem necessary.
Payment of unpaid subscription or any percentage thereof,
together with any interest accrued, shall be made on the date specified
in the subscription contract or on the date stated in the call made by the
board. Failure to pay on such date shall render the entire balance due
and payable and shall make the stockholder liable for interest at the
legal rate on such balance, unless a different interest rate is provided in
the subscription contract. The interest shall be computed from the date
specified, until full payment of the subscription. If no payment is made
within thirty (30) days from the said date, all stocks covered by the
subscription shall thereupon become delinquent and shall be subject to
sale as hereinafter provided, unless the board of directors orders
otherwise.
SECTION 67. Delinquency Sale.— The board of directors may,
by resolution, order the sale of delinquent stock and shall specifically
state the amount due on each subscription plus all accrued interest, and
the date, time and place of the sale which shall not be less than thirty
(30) days nor more than sixty (60) days from the date the stocks become
delinquent. SDHTEC
Notice of the sale, with a copy of the resolution, shall be sent to
every delinquent stockholder either personally, by registered mail, or
through other means provided in the bylaws. The same shall be
published once a week for two (2) consecutive weeks in a newspaper of
general circulation in the province or city where the principal office of
the corporation is located.
Unless the delinquent stockholder pays to the corporation, on
or before the date specified for the sale of the delinquent stock, the
balance due on the former's subscription, plus accrued interest, costs of
advertisement and expenses of sale, or unless the board of directors
otherwise orders, said delinquent stock shall be sold at a public auction
to such bidder who shall offer to pay the full amount of the balance on
the subscription together with accrued interest, costs of advertisement
and expenses of sale, for the smallest number of shares or fraction of a
share. The stock so purchased shall be transferred to such purchaser in
the books of the corporation and a certificate for such stock shall be
issued in the purchaser's favor. The remaining shares, if any, shall be
credited in favor of the delinquent stockholder who shall likewise be
entitled to the issuance of a certificate of stock covering such shares.
Should there be no bidder at the public auction who offers to
pay the full amount of the balance on the subscription together with
accrued interest, costs of advertisement, and expenses of sale, for the
smallest number of shares or fraction of a share, the corporation may,
subject to the provisions of this Code, bid for the same, and the total
amount due shall be credited as fully paid in the books of the
corporation. Title to all the shares of stock covered by the subscription
shall be vested in the corporation as treasury shares and may be
disposed of by said corporation in accordance with the provisions of
this Code.
SECTION 68. When Sale May be Questioned.— No action to
recover delinquent stock sold can be sustained upon the ground of
irregularity or defect in the notice of sale, or in the sale itself of the
delinquent stock, unless the party seeking to maintain such action first
pays or tenders to the party holding the stock the sum for which the
same was sold, with interest from the date of sale at the legal rate. No
such action shall be maintained unless a complaint is filed within six (6)
months from the date of sale.
SECTION 69. Court Action to Recover Unpaid Subscription. —
Nothing in this Code shall prevent the corporation from collecting
through court action, the amount due on any unpaid subscription, with
accrued interest, costs and expenses.
SECTION 70. Effect of Delinquency. — No delinquent stock shall
be voted for, be entitled to vote, or be represented at any stockholder's
meeting, nor shall the holder thereof be entitled to any of the rights of a
stockholder except the right to dividends in accordance with the
provisions of this Code, until and unless payment is made by the
holder of such delinquent stock for the amount due on the subscription
with accrued interest, and the costs and expenses of advertisement, if
any.
SECTION 71. Rights of Unpaid Shares, Nondelinquent.— Holders
of subscribed shares not fully paid which are not delinquent shall have
all the rights of a stockholder.
SECTION 72. Lost or Destroyed Certificates.— The following
procedure shall be followed by a corporation in issuing new certificates
of stock in lieu of those which have been lost, stolen or destroyed:
(a) The registered owner of a certificate of stock in a
corporation or such person's legal
representative shall file with the corporation
an affidavit in triplicate setting forth, if
possible, the circumstances as to how the
certificate was lost, stolen or destroyed, the
number of shares represented by such
certificate, the serial number of the certificate
and the name of the corporation which issued
the same. The owner of such certificate of
stock shall also submit such other information
and evidence as may be deemed necessary;
and
(b) After verifying the affidavit and other information
and evidence with the books of the
corporation, the corporation shall publish a
notice in a newspaper of general circulation
in the place where the corporation has its
principal office, once a week for three (3)
consecutive weeks at the expense of the
registered owner of the certificate of stock
which has been lost, stolen or destroyed. The
notice shall state the name of the corporation,
the name of the registered owner, the serial
number of the certificate, the number of
shares represented by such certificate, and
shall state that after the expiration of one (1)
year from the date of the last publication, if
no contest has been presented to the
corporation regarding the certificate of stock,
the right to make such contest shall be barred
and the corporation shall cancel the lost,
destroyed or stolen certificate of stock in its
books. In lieu thereof, the corporation shall
issue a new certificate of stock, unless the
registered owner files a bond or other security
as may be required, effective for a period of
one (1) year, for such amount and in such
form and with such sureties as may be
satisfactory to the board of directors, in which
case a new certificate may be issued even
before the expiration of the one (1) year
period provided herein. If a contest has been
presented to the corporation or if an action is
pending in court regarding the ownership of
the certificate of stock which has been lost,
stolen or destroyed, the issuance of the new
certificate of stock in lieu thereof shall be
suspended until the court renders a final
decision regarding the ownership of the
certificate of stock which has been lost, stolen
or destroyed.
Except in case of fraud, bad faith, or negligence on
the part of the corporation and its officers, no
action may be brought against any
corporation which shall have issued
certificate of stock in lieu of those lost, stolen
or destroyed pursuant to the procedure
above-described.
TITLE VIII
Corporate Books and Records
SECTION 73. Books to be Kept; Stock Transfer Agent.— Every
corporation shall keep and carefully preserve at its principal office all
information relating to the corporation including, but not limited to:
(a) The articles of incorporation and bylaws of the
corporation and all their amendments;
(b) The current ownership structure and voting rights
of the corporation, including lists of
stockholders or members, group structures,
intra-group relations, ownership data, and
beneficial ownership;
(c) The names and addresses of all the members of the "The Securities Regulation Code," and the
board of directors or trustees and the Rules of Court.
executive officers;
A requesting party who is not a stockholder or
(d) A record of all business transactions; member of record, or is a competitor, director,
officer, controlling stockholder or otherwise
(e) A record of the resolutions of the board of directors
represents the interests of a competitor shall
or trustees and of the stockholders or
have no right to inspect or demand
members;
reproduction of corporate records.
(f) Copies of the latest reportorial requirements
Any stockholder who shall abuse the rights granted
submitted to the Commission; and
under this section shall be penalized under
(g) The minutes of all meetings of stockholders or Section 158 of this Code, without prejudice to
members, or of the board of directors or the provisions of Republic Act No. 8293,
trustees. Such minutes shall set forth in detail, otherwise known as the "Intellectual Property
among others: the time and place of the Code of the Philippines," as amended, and
meeting held, how it was authorized, the Republic Act No. 10173, otherwise known as
notice given, the agenda therefor, whether the the "Data Privacy Act of 2012."
meeting was regular or special, its object if
Any officer or agent of the corporation who shall
special, those present and absent, and every
refuse to allow the inspection and/or
act done or ordered done at the meeting.
reproduction of records in accordance with
Upon the demand of a director, trustee,
the provisions of this Code shall be liable to
stockholder or member, the time when any
such director, trustee, stockholder or member
director, trustee, stockholder or member
for damages, and in addition, shall be guilty
entered or left the meeting must be noted in
of an offense which shall be punishable under
the minutes; and on a similar demand, the
Section 161 of this Code: Provided,That if such
yeas and nays must be taken on any motion
refusal is made pursuant to a resolution or
or proposition, and a record thereof carefully
order of the board of directors or trustees, the
made. The protest of a director, trustee,
liability under this section for such action
stockholder or member on any action or
shall be imposed upon the directors or
proposed action must be recorded in full
trustees who voted for such refusal: Provided,
upon their demand.
further,That it shall be a defense to any action
Corporate records, regardless of the form in which under this section that the person demanding
they are stored, shall be open to inspection by to examine and copy excerpts from the
any director, trustee, stockholder or member corporation's records and minutes has
of the corporation in person or by a improperly used any information secured
representative at reasonable hours on through any prior examination of the records
business days, and a demand in writing may or minutes of such corporation or of any
be made by such director, trustee or other corporation, or was not acting in good
stockholder at their expense, for copies of faith or for a legitimate purpose in making
such records or excerpts from said records. the demand to examine or reproduce
The inspecting or reproducing party shall corporate records, or is a competitor, director,
remain bound by confidentiality rules under officer, controlling stockholder or otherwise
prevailing laws, such as the rules on trade represents the interests of a competitor.
secrets or processes under Republic Act No.
If the corporation denies or does not act on a
8293, otherwise known as the "Intellectual
demand for inspection and/or reproduction,
Property Code of the Philippines," as
the aggrieved party may report such denial or
amended, Republic Act No. 10173, otherwise
inaction to the Commission. Within five (5)
known as the "Data Privacy Act of 2012,"
days from receipt of such report, the
Republic Act No. 8799, otherwise known as
Commission shall conduct a summary
 investigation and issue an order directing the
inspection or reproduction of the requested
records.
Stock corporations must also keep a stock and
transfer book, which shall contain a record of
all stocks in the names of the stockholders
alphabetically arranged; the installments paid
and unpaid on all stocks for which
subscription has been made, and the date of
payment of any installment; a statement of
every alienation, sale or transfer of stock
made, the date thereof, by and to whom
made; and such other entries as the bylaws
may prescribe. The stock and transfer book
shall be kept in the principal office of the
corporation or in the office of its stock
transfer agent and shall be open for
inspection by any director or stockholder of
the corporation at reasonable hours on
business days.
A stock transfer agent or one engaged principally in
the business of registering transfers of stocks
in behalf of a stock corporation shall be
allowed to operate in the Philippines upon
securing a license from the Commission and
the payment of a fee to be fixed by the
Commission, which shall be renewable
annually: Provided, That a stock corporation is
not precluded from performing or making
transfers of its own stocks, in which case all
the rules and regulations imposed on stock
transfer agents, except the payment of a
license fee herein provided, shall be
applicable: Provided, further,That the
Commission may require stock corporations
which transfer and/or trade stocks in
secondary markets to have an independent
transfer agent.
SECTION 74. Right to Financial Statements.— A corporation
shall furnish a stockholder or member, within ten (10) days from receipt
of their written request, its most recent financial statement, in the form
and substance of the financial reporting required by the Commission.
At the regular meeting of stockholders or members, the board
of directors or trustees shall present to such stockholders or members a
financial report of the operations of the corporation for the preceding
year, which shall include financial statements, duly signed and certified
in accordance with this Code, and the rules the Commission may
prescribe.
However, if the total assets or total liabilities of the corporation
are less than Six hundred thousand pesos (P600,000.00),or such other
amount as may be determined appropriate by the Department of
Finance, the financial statements may be certified under oath by the
treasurer and the president.
TITLE IX
Merger and Consolidation
SECTION 75. Plan of Merger or Consolidation.— Two (2) or more
corporations may merge into a single corporation which shall be one of
the constituent corporations or may consolidate into a new single
corporation which shall be the consolidated corporation.
The board of directors or trustees of each corporation, party to
the merger or consolidation, shall approve a plan of merger or
consolidation setting forth the following:
(a) The names of the corporations proposing to merge
or consolidate, hereinafter referred to as the
constituent corporations;
(b) The terms of the merger or consolidation and the
mode of carrying the same into effect;
(c) A statement of the changes, if any, in the articles of
incorporation of the surviving corporation in
case of merger; and, in case of consolidation,
all the statements required to be set forth in
the articles of incorporation for corporations
organized under this Code; and AScHCD
(d) Such other provisions with respect to the proposed
merger or consolidation as are deemed
necessary or desirable.
SECTION 76. Stockholders' or Members' Approval. — Upon
approval by a majority vote of each of the board of directors or trustees
of the constituent corporations of the plan of merger or consolidation,
the same shall be submitted for approval by the stockholders or
members of each of such corporations at separate corporate meetings
duly called for the purpose. Notice of such meetings shall be given to
all stockholders or members of the respective corporations in the same
manner as giving notice of regular or special meetings under Section 49
of this Code. The notice shall state the purpose of the meeting and
include a copy or a summary of the plan of merger or consolidation.
The affirmative vote of stockholders representing at least
two-thirds (2/3) of the outstanding capital stock of each corporation in
the case of stock corporations or at least two-thirds (2/3) of the
members in the case of nonstock corporations shall be necessary for the
approval of such plan. Any dissenting stockholder may exercise the
right of appraisal in accordance with this Code: Provided,That if after
the approval by the stockholders of such plan, the board of directors
decides to abandon the plan, the right of appraisal shall be
extinguished.
Any amendment to the plan of merger or consolidation may be
made: Provided,That such amendment is approved by a majority vote of
the respective boards of directors or trustees of all the constituent
corporations and ratified by the affirmative vote of stockholders
representing at least two-thirds (2/3) of the outstanding capital stock or
of two-thirds (2/3) of the members of each of the constituent
corporations. Such plan, together with any amendment, shall be
considered as the agreement of merger or consolidation.
SECTION 77. Articles of Merger or Consolidation.— After the
approval by the stockholders or members as required by the preceding
section, articles of merger or articles of consolidation shall be executed
by each of the constituent corporations, to be signed by the president or
vice president and certified by the secretary or assistant secretary of
each corporation setting forth:
(a) The plan of the merger or the plan of consolidation;
(b) As to stock corporations, the number of shares
outstanding, or in the case of nonstock
corporations, the number of members;
(c) As to each corporation, the number of shares or
members voting for or against such plan,
respectively;
(d) The carrying amounts and fair values of the assets
and liabilities of the respective companies as
of the agreed cut-off date;
(e) The method to be used in the merger or
consolidation of accounts of the companies;
(f) The provisional or pro forma values, as merged or
consolidated, using the accounting method;
and
(g) Such other information as may be prescribed by
the Commission.
SECTION 78. Effectivity of Merger or Consolidation. — The
articles of merger or of consolidation, signed and certified as required
by this Code, shall be submitted to the Commission for its approval:
Provided, That in the case of merger or consolidation of banks or
banking institutions, loan associations, trust companies, insurance
companies, public utilities, educational institutions, and other special
corporations governed by special laws, the favorable recommendation
of the appropriate government agency shall first be obtained. If the
Commission is satisfied that the merger or consolidation of the
corporations concerned is consistent with the provisions of this Code
and existing laws, it shall issue a certificate approving the articles and
plan of merger or of consolidation, at which time the merger or
consolidation shall be effective.
If, upon investigation, the Commission has reason to believe
that the proposed merger or consolidation is contrary to or inconsistent
with the provisions of this Code or existing laws, it shall set a hearing
to give the corporations concerned the opportunity to be heard. Written
notice of the date, time, and place of hearing shall be given to each
constituent corporation at least two (2) weeks before said hearing. The
Commission shall thereafter proceed as provided in this Code.
SECTION 79. Effects of Merger or Consolidation.— The merger or
consolidation shall have the following effects:
(a) The constituent corporations shall become a single
corporation which, in case of merger, shall be
the surviving corporation designated in the
plan of merger; and, in case of consolidation,
shall be the consolidated corporation
designated in the plan of consolidation;
(b) The separate existence of the constituent
corporations shall cease, except that of the
surviving or the consolidated corporation;
(c) The surviving or the consolidated corporation shall
possess all the rights, privileges, immunities,
and powers and shall be subject to all the
duties and liabilities of a corporation
organized under this Code;
(d) The surviving or the consolidated corporation
shall possess all the rights, privileges,
immunities and franchises of each constituent
corporation; and all real or personal property,
all receivables due on whatever account,
including subscriptions to shares and other
choses in action, and every other interest of,
belonging to, or due to each constituent
corporation, shall be deemed transferred to
and vested in such surviving or consolidated
corporation without further act or deed; and
(e) The surviving or consolidated corporation shall be
responsible for all the liabilities and
obligations of each constituent corporation as
though such surviving or consolidated
corporation had itself incurred such liabilities
or obligations; and any pending claim, action
or proceeding brought by or against any
constituent corporation may be prosecuted by
or against the surviving or consolidated
corporation. The rights of creditors or liens
upon the property of such constituent
 corporations shall not be impaired by the
merger or consolidation.
TITLE X
Appraisal Right
SECTION 80. When the Right of Appraisal May Be Exercised.—
Any stockholder of a corporation shall have the right to dissent and
demand payment of the fair value of the shares in the following
instances:
(a) In case an amendment to the articles of
incorporation has the effect of changing or
restricting the rights of any stockholder or
class of shares, or of authorizing preferences
in any respect superior to those of
outstanding shares of any class, or of
extending or shortening the term of corporate
existence;
(b) In case of sale, lease, exchange, transfer, mortgage,
pledge or other disposition of all or
substantially all of the corporate property and
assets as provided in this Code;
(c) In case of merger or consolidation; and
(d) In case of investment of corporate funds for any
purpose other than the primary purpose of
the corporation.
SECTION 81. How Right is Exercised.— The dissenting
stockholder who votes against a proposed corporate action may
exercise the right of appraisal by making a written demand on the
corporation for the payment of the fair value of shares held within
thirty (30) days from the date on which the vote was taken:
Provided,That failure to make the demand within such period shall be
deemed a waiver of the appraisal right. If the proposed corporate
action is implemented, the corporation shall pay the stockholder, upon
surrender of the certificate or certificates of stock representing the
stockholder's shares, the fair value thereof as of the day before the vote
was taken, excluding any appreciation or depreciation in anticipation of
such corporate action.
If, within sixty (60) days from the approval of the corporate
action by the stockholders, the withdrawing stockholder and the
corporation cannot agree on the fair value of the shares, it shall be
determined and appraised by three (3) disinterested persons, one of
whom shall be named by the stockholder, another by the corporation,
and the third by the two (2) thus chosen. The findings of the majority of
the appraisers shall be final, and their award shall be paid by the
corporation within thirty (30) days after such award is made:
Provided,That no payment shall be made to any dissenting stockholder
unless the corporation has unrestricted retained earnings in its books to
cover such payment: Provided, further,That upon payment by the
corporation of the agreed or awarded price, the stockholder shall
forthwith transfer the shares to the corporation.
SECTION 82. Effect of Demand and Termination of Right. — From
the time of demand for payment of the fair value of a stockholder's
shares until either the abandonment of the corporate action involved or
the purchase of the said shares by the corporation, all rights accruing to
such shares, including voting and dividend rights, shall be suspended
in accordance with the provisions of this Code, except the right of such
stockholder to receive payment of the fair value thereof: Provided,That if
the dissenting stockholder is not paid the value of the said shares
within thirty (30) days after the award, the voting and dividend rights
shall immediately be restored.
SECTION 83. When Right to Payment Ceases.— No demand for
payment under this Title may be withdrawn unless the corporation
consents thereto. If, however, such demand for payment is withdrawn
with the consent of the corporation, or if the proposed corporate action
is abandoned or rescinded by the corporation or disapproved by the
Commission where such approval is necessary, or if the Commission
determines that such stockholder is not entitled to the appraisal right,
then the right of the stockholder to be paid the fair value of the shares
shall cease, the status as the stockholder shall be restored, and all
dividend distributions which would have accrued on the shares shall
be paid to the stockholder.
SECTION 84. Who Bears Costs of Appraisal.— The costs and
expenses of appraisal shall be borne by the corporation, unless the fair
value ascertained by the appraisers is approximately the same as the
price which the corporation may have offered to pay the stockholder, in
which case they shall be borne by the latter. In the case of an action to
recover such fair value, all cost and expenses shall be assessed against
the corporation, unless the refusal of the stockholder to receive
payment was unjustified.
SECTION 85. Notation on Certificates; Rights of Transferee.—
Within ten (10) days after demanding payment for shares held, a
dissenting stockholder shall submit the certificates of stock
representing the shares to the corporation for notation that such shares
are dissenting shares. Failure to do so shall, at the option of the
corporation, terminate the rights under this Title. If shares represented
by the certificates bearing such notation are transferred, and the
certificates consequently cancelled, the rights of the transferor as a
dissenting stockholder under this Title shall cease and the transferee
shall have all the rights of a regular stockholder; and all dividend
distributions which would have accrued on such shares shall be paid to
the transferee.
TITLE XI
 Nonstock Corporation
SECTION 86. Definition. — For purposes of this Code and
subject to its provisions on dissolution, a nonstock corporation is one
where no part of its income is distributable as dividends to its
members, trustees, or officers: Provided,That any profit which a
nonstock corporation may obtain incidental to its operations shall,
whenever necessary or proper, be used for the furtherance of the
purpose or purposes for which the corporation was organized, subject
to the provisions of this Title.
The provisions governing stock corporations, when pertinent,
shall be applicable to nonstock corporations, except as may be covered
by specific provisions of this Title.
SECTION 87. Purposes.— Nonstock corporations may be
formed or organized for charitable, religious, educational, professional,
cultural, fraternal, literary, scientific, social, civic service, or similar
purposes, like trade, industry, agricultural and like chambers, or any
combination thereof, subject to the special provisions of this Title
governing particular classes of nonstock corporations.
CHAPTER I
Members
SECTION 88. Right to Vote.— The right of the members of any
class or classes to vote may be limited, broadened, or denied to the
extent specified in the articles of incorporation or the bylaws. Unless so
limited, broadened, or denied, each member, regardless of class, shall
be entitled to one (1) vote.
Unless otherwise provided in the articles of incorporation or
the bylaws, a member may vote by proxy, in accordance with the
provisions of this Code. The bylaws may likewise authorize voting
through remote communication and/or in absentia.
SECTION 89. Nontransferability of Membership.— Membership
in a nonstock corporation and all rights arising therefrom are personal
and nontransferable, unless the articles of incorporation or the bylaws
otherwise provide.
SECTION 90. Termination of Membership.— Membership shall
be terminated in the manner and for the causes provided in the articles
of incorporation or the bylaws. Termination of membership shall
extinguish all rights of a member in the corporation or in its property,
unless otherwise provided in the articles of incorporation or the
bylaws.
CHAPTER II
Trustees and Officers
SECTION 91. Election and Term of Trustees.— The number of
trustees shall be fixed in the articles of incorporation or bylaws which
may or may not be more than fifteen (15).They shall hold office for not
more than three (3) years until their successors are elected and
qualified. Trustees elected to fill vacancies occurring before the
expiration of a particular term shall hold office only for the unexpired
period.
Except with respect to independent trustees of nonstock
corporations vested with public interest, only a member of the
corporation shall be elected as trustee.
Unless otherwise provided in the articles of incorporation or
the bylaws, the members may directly elect officers of a nonstock
corporation.
SECTION 92. List of Members and Proxies, Place of Meetings.—
The corporation shall, at all times, keep a list of its members and their
proxies in the form the Commission may require. The list shall be
updated to reflect the members and proxies of record twenty (20) days
prior to any scheduled election. The bylaws may provide that the
members of a nonstock corporation may hold their regular or special
meetings at any place even outside the place where the principal office
of the corporation is located: Provided,That proper notice is sent to all
members indicating the date, time and place of the meeting: Provided,
further,That the place of meeting shall be within Philippine territory.
CHAPTER III
Distribution of Assets in Nonstock Corporations
SECTION 93. Rules of Distribution. — The assets of a nonstock
corporation undergoing the process of dissolution for reasons other
than those set forth in Section 139 of this Code shall be applied and
distributed as follows:
(a) All liabilities and obligations of the corporation
shall be paid, satisfied and discharged, or
adequate provision shall be made therefor;
(b) Assets held by the corporation upon a condition
requiring return, transfer or conveyance, and
which condition occurs by reason of the
dissolution, shall be returned, transferred or
conveyed in accordance with such
requirements;
(c) Assets received and held by the corporation subject
to limitations permitting their use only for
charitable, religious, benevolent, educational
or similar purposes, but not held upon a
condition requiring return, transfer or
conveyance by reason of the dissolution, shall
be transferred or conveyed to one (1) or more
corporations, societies or organizations
engaged in activities in the Philippines
substantially similar to those of the dissolving
corporation according to a plan of
 distribution adopted pursuant to this
Chapter;
(d) Assets other than those mentioned in the
preceding paragraphs, if any, shall be
distributed in accordance with the provisions
of the articles of incorporation or the bylaws,
to the extent that the articles of incorporation
or the bylaws determine the distributive
rights of members, or any class or classes of
members, or provide for distribution; and
(e) In any other case, assets may be distributed to such
persons, societies, organizations or
corporations, whether or not organized for
profit, as may be specified in a plan of
distribution adopted pursuant to this
Chapter.
SECTION 94. Plan of Distribution of Assets.— A plan providing
for the distribution of assets, consistent with the provisions of this Title,
may be adopted by a nonstock corporation in the process of dissolution
in the following manner:
(a) The board of trustees shall, by majority vote, adopt
a resolution recommending a plan of
distribution and directing the submission
thereof to a vote at a regular or special
meeting of members having voting rights;
(b) Each member entitled to vote shall be given a
written notice setting forth the proposed plan
of distribution or a summary thereof and the
date, time and place of such meeting within
the time and in the manner provided in this
Code for the giving of notice of meetings; and
(c) Such plan of distribution shall be adopted upon
approval of at least two-thirds (2/3) of the
members having voting rights present or
represented by proxy at such meeting.
TITLE XII
Close Corporations
SECTION 95. Definition and Applicability of Title. — A close
corporation, within the meaning of this Code, is one whose articles of
incorporation provides that: (a) all the corporation's issued stock of all
classes, exclusive of treasury shares, shall be held of record by not more
than a specified number of persons, not exceeding twenty (20); (b) all
the issued stock of all classes shall be subject to one (1) or more
specified restrictions on transfer permitted by this Title; and (c) the
corporation shall not list in any stock exchange or make any public
offering of its stocks of any class. Notwithstanding the foregoing, a
corporation shall not be deemed a close corporation when at least
two-thirds (2/3) of its voting stock or voting rights is owned or
controlled by another corporation which is not a close corporation
within the meaning of this Code.
Any corporation may be incorporated as a close corporation,
except mining or oil companies, stock exchanges, banks, insurance
companies, public utilities, educational institutions and corporations
declared to be vested with public interest in accordance with the
provisions of this Code.
The provisions of this Title shall primarily govern close
corporations: Provided, That other Titles in this Code shall apply
suppletorily, except as otherwise provided under this Title.
SECTION 96. Articles of Incorporation.— The articles of
incorporation of a close corporation may provide for:
(a) A classification of shares or rights, the
qualifications for owning or holding the
same, and restrictions on their transfers,
subject to the provisions of the following
section;
(b) A classification of directors into one (1) or more
classes, each of whom may be voted for and
elected solely by a particular class of stock;
and
(c) Greater quorum or voting requirements in
meetings of stockholders or directors than
those provided in this Code.
The articles of incorporation of a close corporation may
provide that the business of the corporation shall be managed by the
stockholders of the corporation rather than by a board of directors. So
long as this provision continues in effect, no meeting of stockholders
need be called to elect directors: Provided, That the stockholders of the
corporation shall be deemed to be directors for the purpose of applying
the provisions of this Code, unless the context clearly requires
otherwise: Provided, further,That the stockholders of the corporation
shall be subject to all liabilities of directors.
The articles of incorporation may likewise provide that all
officers or employees or that specified officers or employees shall be
elected or appointed by the stockholders, instead of by the board of
directors.
SECTION 97. Validity of Restrictions on Transfer of Shares.—
Restrictions on the right to transfer shares must appear in the articles of
incorporation, in the bylaws, as well as in the certificate of stock;
otherwise, the same shall not be binding on any purchaser in good
faith. Said restrictions shall not be more onerous than granting the
existing stockholders or the corporation the option to purchase the
shares of the transferring stockholder with such reasonable terms,
conditions or period stated. If, upon the expiration of said period, the
existing stockholders or the corporation fails to exercise the option to
purchase, the transferring stockholder may sell their shares to any third
person.
SECTION 98. Effects of Issuance or Transfer of Stock in Breach of
Qualifying Conditions.—
(a) If a stock of a close corporation is issued or
transferred to any person who is not eligible
to be a holder thereof under any provision of
the articles of incorporation, and if the
certificate for such stock conspicuously shows
the qualifications of the persons entitled to be
holders of record thereof, such person is
SECTION 99. Agreements by Stockholders.—
conclusively presumed to have notice of the
fact of the ineligibility to be a stockholder.
(b) If the articles of incorporation of a close
corporation states the number of persons, not
exceeding twenty (20),who are entitled to be
stockholders of record, and if the certificate
for such stock conspicuously states such
number, and the issuance or transfer of stock
to any person would cause the stock to be
held by more than such number of persons,
the person to whom such stock is issued or
transferred is conclusively presumed to have
notice of this fact.
(c) If a stock certificate of a close corporation
conspicuously shows a restriction on transfer
of the corporation's stock and the transferee
acquires the stock in violation of such
restriction, the transferee is conclusively
presumed to have notice of the fact that the
stock was acquired in violation of the
restriction.
(d) Whenever a person to whom stock of a close
corporation has been issued or transferred
has or is conclusively presumed under this
section to have notice of: (1) the person's
ineligibility to be a stockholder of the
corporation; or (2) that the transfer of stock
would cause the stock of the corporation to be
held by more than the number of persons
permitted under its articles of incorporation;
or (3) that the transfer violates a restriction on
transfer of stock, the corporation may, at its
option, refuse to register the transfer in the
name of the transferee.
(e) The provisions of subsection (d) shall not be
applicable if the transfer of stock, though
contrary to subsections (a),(b) or (c),has been
consented to by all the stockholders of the
close corporation, or if the close corporation
has amended its articles of incorporation in
accordance with this Title.
(f) The term "transfer," as used in this section, is not
limited to a transfer for value.
(g) The provisions of this section shall not impair any
right which the transferee may have to either
rescind the transfer or recover the stock under
any express or implied warranty.
(a) Agreements duly signed and executed by and
among all stockholders before the formation
and organization of a close corporation shall
survive the incorporation and shall continue
to be valid and binding between such
stockholders, if such be their intent, to the
extent that such agreements are consistent
with the articles of incorporation, irrespective
of where the provisions of such agreements
are contained, except those required by this
Title to be embodied in said articles of
incorporation.
(b) A written agreement signed by two (2) or more
stockholders may provide that in exercising
any voting right, the shares held by them
shall be voted as provided or as agreed, or in
accordance with a procedure agreed upon by
them.
(c) No provision in a written agreement signed by the
stockholders, relating to any phase of
corporate affairs, shall be invalidated
between the parties on the ground that its
effect is to make them partners among
themselves.
(d) A written agreement among some or all of the
stockholders in a close corporation shall not
be invalidated on the ground that it relates to
the conduct of the business and affairs of the
corporation as to restrict or interfere with the
discretion or powers of the board of directors:
Provided, That such agreement shall impose
on the stockholders who are parties thereto
 the liabilities for managerial acts imposed on
directors by this Code.
(e) Stockholders actively engaged in the management
or operation of the business and affairs of a
close corporation shall be held to strict
fiduciary duties to each other and among
themselves. The stockholders shall be
personally liable for corporate torts unless the
corporation has obtained reasonably
adequate liability insurance.
SECTION 100. When a Board Meeting is Unnecessary or
Improperly Held.— Unless the bylaws provide otherwise, any action
taken by the directors of a close corporation without a meeting called
properly and with due notice shall nevertheless be deemed valid if:
(a) Before or after such action is taken, a written
consent thereto is signed by all the directors;
or
(b) All the stockholders have actual or implied
knowledge of the action and make no prompt
objection in writing; or
(c) The directors are accustomed to take informal
action with the express or implied
acquiescence of all the stockholders; or
(d) All the directors have express or implied
knowledge of the action in question and none
of them makes a prompt objection in writing.
An action within the corporate powers taken at a meeting held
without proper call or notice is deemed ratified by a director who failed
to attend, unless after having knowledge thereof, the director promptly
files his written objection with the secretary of the corporation.
SECTION 101. Preemptive Right in Close Corporations.— The
preemptive right of stockholders in close corporations shall extend to
all stock to be issued, including reissuance of treasury shares, whether
for money, property or personal services, or in payment of corporate
debts, unless the articles of incorporation provide otherwise.
SECTION 102. Amendment of Articles of Incorporation.— Any
amendment to the articles of incorporation which seeks to delete or
remove any provision required by this Title or to reduce a quorum or
voting requirement stated in said articles of incorporation shall require
the affirmative vote of at least two-thirds (2/3) of the outstanding
capital stock, whether with or without voting rights, or of such greater
proportion of shares as may be specifically provided in the articles of
incorporation for amending, deleting or removing any of the aforesaid
provisions, at a meeting duly called for the purpose.
SECTION 103. Deadlocks.— Notwithstanding any contrary
provision in the close corporation's articles of incorporation, bylaws, or
stockholders' agreement, if the directors or stockholders are so divided
on the management of the corporation's business and affairs that the
votes required for a corporate action cannot be obtained, with the
consequence that the business and affairs of the corporation can no
longer be conducted to the advantage of the stockholders generally, the
Commission, upon written petition by any stockholder, shall have the
power to arbitrate the dispute. In the exercise of such power, the
Commission shall have authority to make appropriate orders, such as:
(a) cancelling or altering any provision contained in the articles of
incorporation, bylaws, or any stockholders' agreement; (b) cancelling,
altering or enjoining a resolution or act of the corporation or its board
of directors, stockholders, or officers; (c) directing or prohibiting any act
of the corporation or its board of directors, stockholders, officers, or
other persons party to the action; (d) requiring the purchase at their fair
value of shares of any stockholder, either by the corporation regardless
of the availability of unrestricted retained earnings in its books, or by
the other stockholders; (e) appointing a provisional director; (f)
dissolving the corporation; or (g) granting such other relief as the
circumstances may warrant.
A provisional director shall be an impartial person who is
neither a stockholder nor a creditor of the corporation or any of its
subsidiaries or affiliates, and whose further qualifications, if any, may
be determined by the Commission. A provisional director is not a
receiver of the corporation and does not have the title and powers of a
custodian or receiver. A provisional director shall have all the rights
and powers of a duly elected director, including the right to be notified
of and to vote at meetings of directors until removed by order of the
Commission or by all the stockholders. The compensation of the
provisional director shall be determined by agreement between such
director and the corporation, subject to approval of the Commission,
which may fix the compensation absent an agreement or in the event of
disagreement between the provisional director and the corporation.
SECTION 104. Withdrawal of Stockholder or Dissolution of
Corporation.— In addition and without prejudice to other rights and remedies
available under this Title, any stockholder of a close corporation may, for any
reason, compel the corporation to purchase shares held at fair value, which
shall not be less than the par or issued value, when the corporation has
sufficient assets in its books to cover its debts and liabilities exclusive of capital
stock: Provided,That any stockholder of a close corporation may, by
written petition to the Commission, compel the dissolution of such
corporation whenever any acts of the directors, officers, or those in
control of the corporation are illegal, fraudulent, dishonest, oppressive
or unfairly prejudicial to the corporation or any stockholder, or
whenever corporate assets are being misapplied or wasted.
TITLE XIII
 Special Corporations
CHAPTER I
Educational Corporations
SECTION 105. Incorporation. — Educational corporations shall
be governed by special laws and by the general provisions of this Code.
SECTION 106. Board of Trustees.— Trustees of educational
institutions organized as nonstock corporations shall not be less than
five (5) nor more than fifteen (15):Provided,That the number of trustees
shall be in multiples of five (5).
Unless otherwise provided in the articles of incorporation or
bylaws, the board of trustees of incorporated schools, colleges, or other
institutions of learning shall, as soon as organized, so classify
themselves that the term of office of one-fifth (1/5) of their number
shall expire every year. Trustees thereafter elected to fill vacancies,
occurring before the expiration of a particular term, shall hold office
only for the unexpired period. Trustees elected thereafter to fill
vacancies caused by expiration of term shall hold office for five (5)
years. A majority of the trustees shall constitute a quorum for the
transaction of business. The powers and authority of trustees shall be
defined in the bylaws.
For institutions organized as stock corporations, the number
and term of directors shall be governed by the provisions on stock
corporations.
CHAPTER II
Religious Corporations
SECTION 107. Classes of Religious Corporations.— Religious
corporations may be incorporated by one (1) or more persons. Such
corporations may be classified into corporations sole and religious
societies.
Religious corporations shall be governed by this Chapter and
by the general provisions on nonstock corporations insofar as
applicable.
SECTION 108. Corporation Sole.— For the purpose of
administering and managing, as trustee, the affairs, property and
temporalities of any religious denomination, sect or church, a
corporation sole may be formed by the chief archbishop, bishop, priest,
minister, rabbi, or other presiding elder of such religious denomination,
sect or church.
SECTION 109. Articles of Incorporation.— In order to become a
corporation sole, the chief archbishop, bishop, priest, minister, rabbi, or
presiding elder of any religious denomination, sect or church must file
with the Commission articles of incorporation setting forth the
following:
(a) That the applicant chief archbishop, bishop, priest,
minister, rabbi, or presiding elder represents
the religious denomination, sect or church
which desires to become a corporation sole;
(b) That the rules, regulations and discipline of the
religious denomination, sect or church are
consistent with becoming a corporation sole
and do not forbid it;
(c) That such chief archbishop, bishop, priest, minister,
rabbi, or presiding elder is charged with the
administration of the temporalities and the
management of the affairs, estate and
properties of the religious denomination, sect
or church within the territorial jurisdiction, so
described succinctly in the articles of
incorporation;
(d) The manner by which any vacancy occurring in
the office of chief archbishop, bishop, priest,
minister, rabbi, or presiding elder is required
to be filled, according to the rules, regulations
or discipline of the religious denomination,
sect or church; and
(e) The place where the principal office of the
corporation sole is to be established and
located, which place must be within the
territory of the Philippines.
The articles of incorporation may include any other provision
not contrary to law for the regulation of the affairs of the corporation.
SECTION 110. Submission of the Articles of Incorporation.— The
articles of incorporation must be verified, by affidavit or affirmation of
the chief archbishop, bishop, priest, minister, rabbi, or presiding elder,
as the case may be, and accompanied by a copy of the commission,
certificate of election or letter of appointment of such chief archbishop,
bishop, priest, minister, rabbi, or presiding elder, duly certified to be
correct by any notary public.
From and after filing with the Commission of the said articles
of incorporation, verified by affidavit or affirmation, and accompanied
by the documents mentioned in the preceding paragraph, such chief
archbishop, bishop, priest, minister, rabbi, or presiding elder shall
become a corporation sole and all temporalities, estate and properties
of the religious denomination, sect or church theretofore administered
or managed as such chief archbishop, bishop, priest, minister, rabbi, or
presiding elder shall be personally held in trust as a corporation sole,
for the use, purpose, exclusive benefit and on behalf of the religious
denomination, sect or church, including hospitals, schools, colleges,
orphan asylums, parsonages, and cemeteries thereof.
 SECTION 111. Acquisition and Alienation of Property.— A
corporation sole may purchase and hold real estate and personal
property for its church, charitable, benevolent, or educational purposes,
and may receive bequests or gifts for such purposes. Such corporation
may sell or mortgage real property held by it by obtaining an order for
that purpose from the Regional Trial Court of the province where the
property is situated upon proof that the notice of the application for
leave to sell or mortgage has been made through publication or as
directed by the Court, and that it is in the interest of the corporation
that leave to sell or mortgage be granted. The application for leave to
sell or mortgage must be made by petition, duly verified, by the chief
archbishop, bishop, priest, minister, rabbi, or presiding elder acting as
corporation sole, and may be opposed by any member of the religious
denomination, sect or church represented by the corporation sole:
Provided, That in cases where the rules, regulations, and discipline of
the religious denomination, sect or church, religious society, or order
concerned represented by such corporation sole regulate the method of
acquiring, holding, selling, and mortgaging real estate and personal
property, such rules, regulations and discipline shall govern, and the
intervention of the courts shall not be necessary.
SECTION 112. Filling of Vacancies.— The successors in office of
any chief archbishop, bishop, priest, minister, rabbi, or presiding elder
in a corporation sole shall become the corporation sole on their
accession to office and shall be permitted to transact business as such
upon filing a copy of their commission, certificate of election, or letters
of appointment, duly certified by any notary public with the
Commission.
During any vacancy in the office of chief archbishop, bishop,
priest, minister, rabbi, or presiding elder of any religious denomination,
sect or church incorporated as a corporation sole, the person or persons
authorized by the rules, regulations or discipline of the religious
denomination, sect or church represented by the corporation sole to
administer the temporalities and manage the affairs, estate, and
properties of the corporation sole shall exercise all the powers and
authority of the corporation sole during such vacancy.
SECTION 113. Dissolution.— A corporation sole may be
dissolved and its affairs settled voluntarily by submitting to the
Commission a verified declaration of dissolution, setting forth:
(a) The name of the corporation;
(b) The reason for dissolution and winding up;
(c) The authorization for the dissolution of the
corporation by the particular religious
denomination, sect or church; and
(d) The names and addresses of the persons who are
to supervise the winding up of the affairs of
the corporation.
Upon approval of such declaration of dissolution by the
Commission, the corporation shall cease to carry on its operations
except for the purpose of winding up its affairs.
SECTION 114. Religious Societies. — Unless forbidden by
competent authority, the Constitution, pertinent rules, regulations, or
discipline of the religious denomination, sect or church of which it is a
part, any religious society, religious order, diocese, or synod, or district
organization of any religious denomination, sect or church, may, upon
written consent and/or by an affirmative vote at a meeting called for
the purpose of at least two-thirds (2/3) of its membership, incorporate
for the administration of its temporalities or for the management of its
affairs, properties, and estate by filing with the Commission, articles of
incorporation verified by the affidavit of the presiding elder, secretary,
or clerk or other member of such religious society or religious order, or
diocese, synod, or district organization of the religious denomination,
sect or church, setting forth the following:
(a) That the religious society or religious order, or
diocese, synod, or district organization is a
religious organization of a religious
denomination, sect or church;
(b) That at least two-thirds (2/3) of its membership
has given written consent or has voted to
incorporate, at a duly convened meeting of
the body;
(c) That the incorporation of the religious society or
religious order, or diocese, synod, or district
organization is not forbidden by competent
authority or by the Constitution, rules,
regulations or discipline of the religious
denomination, sect or church of which it
forms part;
(d) That the religious society or religious order, or
diocese, synod, or district organization
desires to incorporate for the administration
of its affairs, properties and estate;
(e) The place within the Philippines where the
principal office of the corporation is to be
established and located; and
(f) The names, nationalities, and residence addresses
of the trustees, not less than five (5) nor more
than fifteen (15),elected by the religious
society or religious order, or the diocese,
synod, or district organization to serve for the
first year or such other period as may be
prescribed by the laws of the religious society
or religious order, or of the diocese, synod, or
district organization.
 CHAPTER III
One Person Corporations
SECTION 115. Applicability of Provisions to One Person
Corporations. — The provisions of this Title shall primarily apply to One
Person Corporations. Other provisions of this Code apply suppletorily,
except as otherwise provided in this Title.
SECTION 116. One Person Corporation.— A One Person
Corporation is a corporation with a single stockholder: Provided,That only a
natural person, trust, or an estate may form a One Person Corporation.
Banks and quasi-banks, preneed, trust, insurance, public and
publicly-listed companies, and non-chartered government-owned and
-controlled corporations may not incorporate as One Person
Corporations: Provided, further,That a natural person who is licensed to
exercise a profession may not organize as a One Person Corporation for
the purpose of exercising such profession except as otherwise provided
under special laws.
SECTION 117. Minimum Capital Stock Not Required for One
Person Corporation.— A One Person Corporation shall not be required to
have a minimum authorized capital stock except as otherwise provided by
special law.
SECTION 118. Articles of Incorporation. — A One Person
Corporation shall file articles of incorporation in accordance with the
requirements under Section 14 of this Code. It shall likewise
substantially contain the following:
(a) If the single stockholder is a trust or an estate, the
name, nationality, and residence of the
trustee, administrator, executor, guardian,
conservator, custodian, or other person
exercising fiduciary duties together with the
proof of such authority to act on behalf of the
trust or estate; and
(b) Name, nationality, residence of the nominee and
alternate nominee, and the extent, coverage
and limitation of the authority.
SECTION 119. Bylaws.— The One Person Corporation is not
required to submit and file corporate bylaws.
SECTION 120. Display of Corporate Name.— A One Person
Corporation shall indicate the letters "OPC" either below or at the end
of its corporate name.
SECTION 121. Single Stockholder as Director, President.— The
single stockholder shall be the sole director and president of the One
Person Corporation.
SECTION 122. Treasurer, Corporate Secretary, and Other
Officers.— Within fifteen (15) days from the issuance of its certificate of
incorporation, the One Person Corporation shall appoint a treasurer,
corporate secretary, and other officers as it may deem necessary, and
notify the Commission thereof within five (5) days from appointment.
The single stockholder may not be appointed as the corporate
secretary.
A single stockholder who is likewise the self-appointed
treasurer of the corporation shall give a bond to the Commission in
such a sum as may be required: Provided,That the said
stockholder/treasurer shall undertake in writing to faithfully
administer the One Person Corporation's funds to be received as
treasurer, and to disburse and invest the same according to the articles
of incorporation as approved by the Commission. The bond shall be
renewed every two (2) years or as often as may be required.
SECTION 123. Special Functions of the Corporate Secretary.— In
addition to the functions designated by the One Person Corporation,
the corporate secretary shall:
(a) Be responsible for maintaining the minutes book
and/or records of the corporation;
(b) Notify the nominee or alternate nominee of the
death or incapacity of the single stockholder,
which notice shall be given no later than five
(5) days from such occurrence;
(c) Notify the Commission of the death of the single
stockholder within five (5) days from such
occurrence and stating in such notice the
names, residence addresses, and contact
details of all known legal heirs; and
(d) Call the nominee or alternate nominee and the
known legal heirs to a meeting and advise the
legal heirs with regard to, among others, the
election of a new director, amendment of the
articles of incorporation, and other ancillary
and/or consequential matters.
SECTION 124. Nominee and Alternate Nominee.— The single
stockholder shall designate a nominee and an alternate nominee who
shall, in the event of the single stockholder's death or incapacity, take
the place of the single stockholder as director and shall manage the
corporation's affairs.
The articles of incorporation shall state the names, residence
addresses and contact details of the nominee and alternate nominee, as
well as the extent and limitations of their authority in managing the
affairs of the One Person Corporation.
The written consent of the nominee and alternate nominee
shall be attached to the application for incorporation. Such consent may
be withdrawn in writing any time before the death or incapacity of the
single stockholder.
SECTION 125. Term of Nominee and Alternate Nominee.— When
the incapacity of the single stockholder is temporary, the nominee shall
sit as director and manage the affairs of the One Person Corporation
until the stockholder, by self determination, regains the capacity to
assume such duties.
In case of death or permanent incapacity of the single
stockholder, the nominee shall sit as director and manage the affairs of
the One Person Corporation until the legal heirs of the single
stockholder have been lawfully determined, and the heirs have
designated one of them or have agreed that the estate shall be the single
stockholder of the One Person Corporation.
The alternate nominee shall sit as director and manage the One
Person Corporation in case of the nominee's inability, incapacity, death,
or refusal to discharge the functions as director and manager of the
corporation, and only for the same term and under the same conditions
applicable to the nominee.
SECTION 126. Change of Nominee or Alternate Nominee.— The
single stockholder may, at any time, change its nominee and alternate
nominee by submitting to the Commission the names of the new
nominees and their corresponding written consent. For this purpose,
the articles of incorporation need not be amended.
SECTION 127. Minutes Book.— A One Person Corporation
shall maintain a minutes book which shall contain all actions, decisions,
and resolutions taken by the One Person Corporation.
SECTION 128. Records in Lieu of Meetings. — When action is
needed on any matter, it shall be sufficient to prepare a written
resolution, signed and dated by the single stockholder, and recorded in
the minutes book of the One Person Corporation. The date of recording
in the minutes book shall be deemed to be the date of the meeting for
all purposes under this Code.
SECTION 129. Reportorial Requirements.— The One Person
Corporation shall submit the following within such period as the
Commission may prescribe:
(a) Annual financial statements audited by an
independent certified public accountant:
Provided,That if the total assets or total
liabilities of the corporation are less than Six
hundred thousand pesos (P600,000.00),the
financial statements shall be certified under
oath by the corporation's treasurer and
president;
(b) A report containing explanations or comments by
the president on every qualification,
reservation, or adverse remark or disclaimer
made by the auditor in the latter's report;
(c) A disclosure of all self-dealings and related party
transactions entered into between the One
Person Corporation and the single
stockholder; and
(d) Other reports as the Commission may require.
For purposes of this provision, the fiscal year of a One Person
Corporation shall be that set forth in its articles of incorporation or, in
the absence thereof, the calendar year.
The Commission may place the corporation under delinquent
status should the corporation fail to submit the reportorial
requirements three (3) times, consecutively or intermittently, within a
period of five (5) years.
SECTION 130. Liability of Single Shareholder.— A sole
shareholder claiming limited liability has the burden of affirmatively
showing that the corporation was adequately financed.
Where the single stockholder cannot prove that the property of
the One Person Corporation is independent of the stockholder's
personal property, the stockholder shall be jointly and severally liable
for the debts and other liabilities of the One Person Corporation.
The principles of piercing the corporate veil applies with equal
force to One Person Corporations as with other corporations.
SECTION 131. Conversion from an Ordinary Corporation to a One
Person Corporation.— When a single stockholder acquires all the stocks of an
ordinary stock corporation, the latter may apply for conversion into a One
Person Corporation, subject to the submission of such documents as the
Commission may require. If the application for conversion is approved, the
Commission shall issue a certificate of filing of amended articles of
incorporation reflecting the conversion. The One Person Corporation
converted from an ordinary stock corporation shall succeed the latter and be
legally responsible for all the latter's outstanding liabilities as of the date of
conversion.
SECTION 132. Conversion from a One Person Corporation to an
Ordinary Stock Corporation. — A One Person Corporation may be converted
into an ordinary stock corporation after due notice to the Commission of such
fact and of the circumstances leading to the conversion, and after compliance
with all other requirements for stock corporations under this Code and
applicable rules. Such notice shall be filed with the Commission within sixty
(60) days from the occurrence of the circumstances leading to the conversion
into an ordinary stock corporation. If all requirements have been complied
with, the Commission shall issue a certificate of filing of amended articles of
incorporation reflecting the conversion.
In case of death of the single stockholder, the nominee or
alternate nominee shall transfer the shares to the duly designated legal
heir or estate within seven (7) days from receipt of either an affidavit of
heirship or self-adjudication executed by a sole heir, or any other legal
document declaring the legal heirs of the single stockholder and notify
the Commission of the transfer. Within sixty (60) days from the transfer
of the shares, the legal heirs shall notify the Commission of their
decision to either wind up and dissolve the One Person Corporation or
convert it into an ordinary stock corporation.
The ordinary stock corporation converted from a One Person
Corporation shall succeed the latter and be legally responsible for all
the latter's outstanding liabilities as of the date of conversion.
TITLE XIV
Dissolution
SECTION 133. Methods of Dissolution. — A corporation formed
or organized under the provisions of this Code may be dissolved
voluntarily or involuntarily.
SECTION 134. Voluntary Dissolution Where No Creditors Are
Affected.— If dissolution of a corporation does not prejudice the rights
of any creditor having a claim against it, the dissolution may be
effected by majority vote of the board of directors or trustees, and by a
resolution adopted by the affirmative vote of the stockholders owning
at least majority of the outstanding capital stock or majority of the
members of a meeting to be held upon the call of the directors or
trustees.
At least twenty (20) days prior to the meeting, notice shall be
given to each shareholder or member of record personally, by registered
mail, or by any means authorized under its bylaws, whether or not
entitled to vote at the meeting, in the manner provided in Section 50 of
this Code and shall state that the purpose of the meeting is to vote on
the dissolution of the corporation. Notice of the time, place, and object
of the meeting shall be published once prior to the date of the meeting
in a newspaper published in the place where the principal office of said
corporation is located, or if no newspaper is published in such place, in
a newspaper of general circulation in the Philippines.
A verified request for dissolution shall be filed with the
Commission stating: (a) the reason for the dissolution; (b) the form,
manner, and time when the notices were given; (c) names of the
stockholders and directors or members and trustees who approved the
dissolution; (d) the date, place, and time of the meeting in which the
vote was made; and (e) details of publication.
The corporation shall submit the following to the Commission:
(1) a copy of the resolution authorizing the dissolution, certified by a
majority of the board of directors or trustees and countersigned by the
secretary of the corporation; (2) proof of publication; and (3) favorable
recommendation from the appropriate regulatory agency, when
necessary.
Within fifteen (15) days from receipt of the verified request for
dissolution, and in the absence of any withdrawal within said period,
the Commission shall approve the request and issue the certificate of
dissolution. The dissolution shall take effect only upon the issuance by
the Commission of a certificate of dissolution.
No application for dissolution of banks, banking and
quasi-banking institutions, preneed, insurance and trust companies,
NSSLAs, pawnshops, and other financial intermediaries shall be
approved by the Commission unless accompanied by a favorable
recommendation of the appropriate government agency.
SECTION 135. Voluntary Dissolution Where Creditors Are
Affected; Procedure and Contents of Petition.— Where the dissolution of a
corporation may prejudice the rights of any creditor, a verified petition
for dissolution shall be filed with the Commission. The petition shall be
signed by a majority of the corporation's board of directors or trustees,
verified by its president or secretary or one of its directors or trustees,
and shall set forth all claims and demands against it, and that its
dissolution was resolved upon by the affirmative vote of the
stockholders representing at least two-thirds (2/3) of the outstanding
capital stock or at least two-thirds (2/3) of the members at a meeting of
its stockholders or members called for that purpose. The petition shall
likewise state: (a) the reason for the dissolution; (b) the form, manner,
and time when the notices were given; and (c) the date, place, and time
of the meeting in which the vote was made. The corporation shall
submit to the Commission the following: (1) a copy of the resolution
authorizing the dissolution, certified by a majority of the board of
directors or trustees and countersigned by the secretary of the
corporation; and (2) a list of all its creditors.
If the petition is sufficient in form and substance, the
Commission shall, by an order reciting the purpose of the petition, fix a
deadline for filing objections to the petition which date shall not be less
than thirty (30) days nor more than sixty (60) days after the entry of the
order. Before such date, a copy of the order shall be published at least
once a week for three (3) consecutive weeks in a newspaper of general
circulation published in the municipality or city where the principal
office of the corporation is situated, or if there be no such newspaper,
then in a newspaper of general circulation in the Philippines, and a
similar copy shall be posted for three (3) consecutive weeks in three (3)
public places in such municipality or city.
Upon five (5) days' notice, given after the date on which the
right to file objections as fixed in the order has expired, the Commission
shall proceed to hear the petition and try any issue raised in the
objections filed; and if no such objection is sufficient, and the material
allegations of the petition are true, it shall render judgment dissolving
the corporation and directing such disposition of its assets as justice
requires, and may appoint a receiver to collect such assets and pay the
debts of the corporation.
 The dissolution shall take effect only upon the issuance by the
Commission of a certificate of dissolution.
SECTION 136. Dissolution by Shortening Corporate Term. — A
voluntary dissolution may be effected by amending the articles of
incorporation to shorten the corporate term pursuant to the provisions
of this Code. A copy of the amended articles of incorporation shall be
submitted to the Commission in accordance with this Code.
Upon the expiration of the shortened term, as stated in the
approved amended articles of incorporation, the corporation shall be
deemed dissolved without any further proceedings, subject to the
provisions of this Code on liquidation.
In the case of expiration of corporate term, dissolution shall
automatically take effect on the day following the last day of the
corporate term stated in the articles of incorporation, without the need
for the issuance by the Commission of a certificate of dissolution.
SECTION 137. Withdrawal of Request and Petition for
Dissolution.— A withdrawal of the request for dissolution shall be made
in writing, duly verified by any incorporator, director, trustee,
shareholder, or member and signed by the same number of
incorporators, directors, trustees, shareholders, or members necessary
to request for dissolution as set forth in the foregoing sections. The
withdrawal shall be submitted no later than fifteen (15) days from
receipt by the Commission of the request for dissolution. Upon receipt
of a withdrawal of request for dissolution, the Commission shall
withhold action on the request for dissolution and shall, after
investigation: (a) make a pronouncement that the request for
dissolution is deemed withdrawn; (b) direct a joint meeting of the
board of directors or trustees and the stockholders or members for the
purpose of ascertaining whether to proceed with dissolution; or (c)
issue such other orders as it may deem appropriate.
A withdrawal of the petition for dissolution shall be in the
form of a motion and similar in substance to a withdrawal of request
for dissolution but shall be verified and filed prior to publication of the
order setting the deadline for filing objections to the petition.
SECTION 138. Involuntary Dissolution.— A corporation may be
dissolved by the Commission motu proprio or upon filing of a verified
complaint by any interested party. The following may be grounds for
dissolution of the corporation:
(a) Non-use of corporate charter as provided under
Section 21 of this Code;
(b) Continuous inoperation of a corporation as
provided under Section 21 of this Code;
(c) Upon receipt of a lawful court order dissolving the
corporation;
(d) Upon finding by final judgment that the
corporation procured its incorporation
through fraud;
(e) Upon finding by final judgment that the
corporation:
(1) Was created for the purpose of
committing, concealing or aiding the
commission of securities violations,
smuggling, tax evasion, money
laundering, or graft and corrupt
practices;
(2) Committed or aided in the commission of
securities violations, smuggling, tax
evasion, money laundering, or graft
and corrupt practices, and its
stockholders knew of the same; and
(3) Repeatedly and knowingly tolerated the
commission of graft and corrupt
practices or other fraudulent or
illegal acts by its directors, trustees,
officers, or employees.
If the corporation is ordered dissolved by final judgment
pursuant to the grounds set forth in subparagraph (e) hereof, its assets,
after payment of its liabilities, shall, upon petition of the Commission
with the appropriate court, be forfeited in favor of the national
government. Such forfeiture shall be without prejudice to the rights of
innocent stockholders and employees for services rendered, and to the
application of other penalty or sanction under this Code or other laws.
The Commission shall give reasonable notice to, and
coordinate with, the appropriate regulatory agency prior to the
involuntary dissolution of companies under their special regulatory
jurisdiction.
SECTION 139. Corporate Liquidation. — Except for banks, which
shall be covered by the applicable provisions of Republic Act No. 7653,
otherwise known as "The New Central Bank Act," as amended, and
Republic Act No. 3591, otherwise known as the Philippine Deposit
Insurance Corporation Charter, as amended, every corporation whose
charter expires pursuant to its articles of incorporation, is annulled by
forfeiture, or whose corporate existence is terminated in any other
manner, shall nevertheless remain as a body corporate for three (3)
years after the effective date of dissolution, for the purpose of
prosecuting and defending suits by or against it and enabling it to settle
and close its affairs, dispose of and convey its property, and distribute
its assets, but not for the purpose of continuing the business for which
it was established.
 At any time during said three (3) years, the corporation is
authorized and empowered to convey all of its property to trustees for
the benefit of stockholders, members, creditors and other persons in
interest. After any such conveyance by the corporation of its property
in trust for the benefit of its stockholders, members, creditors and
others in interest, all interest which the corporation had in the property
terminates, the legal interest vests in the trustees, and the beneficial
interest in the stockholders, members, creditors or other
persons-in-interest.
Except as otherwise provided for in Sections 93 and 94 of this
Code, upon the winding up of corporate affairs, any asset distributable
to any creditor or stockholder or member who is unknown or cannot be
found shall be escheated in favor of the national government.
Except by decrease of capital stock and as otherwise allowed
by this Code, no corporation shall distribute any of its assets or
property except upon lawful dissolution and after payment of all its
debts and liabilities.
TITLE XV
Foreign Corporations
SECTION 140. Definition and Rights of Foreign Corporations. —
For purposes of this Code, a foreign corporation is one formed,
organized or existing under laws other than those of the Philippines'
and whose laws allow Filipino citizens and corporations to do business
in its own country or State. It shall have the right to transact business in
the Philippines after obtaining a license for that purpose in accordance
with this Code and a certificate of authority from the appropriate
government agency.
SECTION 141. Application to Existing Foreign Corporations. —
Every foreign corporation which, on the date of the effectivity of this
Code, is authorized to do business in the Philippines under a license
issued to it shall continue to have such authority under the terms and
conditions of its license, subject to the provisions of this Code and other
special laws.
SECTION 142. Application for a License.— A foreign corporation
applying for a license to transact business in the Philippines shall
submit to the Commission a copy of its articles of incorporation and
bylaws, certified in accordance with law, and their translation to an
official language of the Philippines, if necessary. The application shall
be under oath and, unless already stated in its articles of incorporation,
shall specifically set forth the following:
(a) The date and term of incorporation;
(b) The address, including the street number, of the
principal office of the corporation in the
country or State of incorporation;
(c) The name and address of its resident agent
authorized to accept summons and process in
all legal proceedings and all notices affecting
the corporation, pending the establishment of
a local office;
(d) The place in the Philippines where the corporation
intends to operate;
(e) The specific purpose or purposes which the
corporation intends to pursue in the
transaction of its business in the Philippines:
Provided,That said purpose or purposes are
those specifically stated in the certificate of
authority issued by the appropriate
government agency;
(f) The names and addresses of the present directors
and officers of the corporation;
(g) A statement of its authorized capital stock and the
aggregate number of shares which the
corporation has authority to issue, itemized
by class, par value of shares, shares without
par value, and series, if any;
(h) A statement of its outstanding capital stock and
the aggregate number of shares which the
corporation has issued, itemized by class, par
value of shares, shares without par value, and
series, if any;
(i) A statement of the amount actually paid in; and
(j) Such additional information as may be necessary or
appropriate in order to enable the
Commission to determine whether such
corporation is entitled to a license to transact
business in the Philippines, and to determine
and assess the fees payable.
Attached to the application for license shall be a certificate
under oath duly executed by the authorized official or officials of the
jurisdiction of its incorporation, attesting to the fact that the laws of the
country or State of the applicant allow Filipino citizens and
corporations to do business therein, and that the applicant is an existing
corporation in good standing. If the certificate is in a foreign language,
a translation thereof in English under oath of the translator shall be
attached to the application.
The application for a license to transact business in the
Philippines shall likewise be accompanied by a statement under oath of
the president or any other person authorized by the corporation,
showing to the satisfaction of the Commission and when appropriate,
other governmental agencies that the applicant is solvent and in sound
financial condition, setting forth the assets and liabilities of the
corporation as of the date not exceeding one (1) year immediately prior
to the filing of the application.
Foreign banking, financial, and insurance corporations shall, in
addition to the above requirements, comply with the provisions of
existing laws applicable to them. In the case of all other foreign
corporations, no application for license to transact business in the
Philippines shall be accepted by the Commission without previous
authority from the appropriate government agency, whenever required
by law.
SECTION 143. Issuance of a License. — If the Commission is
satisfied that the applicant has complied with all the requirements of
this Code and other special laws, rules and regulations, the
Commission shall issue a license to transact business in the Philippines
to the applicant for the purpose or purposes specified in such license.
Upon issuance of the license, such foreign corporation may commence
to transact business in the Philippines and continue to do so for as long
as it retains its authority to act as a corporation under the laws of the
country or State of its incorporation, unless such license is sooner
surrendered, revoked, suspended, or annulled in accordance with this
Code or other special laws. Within sixty (60) days after the issuance of
the license to transact business in the Philippines, the licensee, except
foreign banking or insurance corporations, shall deposit with the
Commission for the benefit of present and future creditors of the
licensee in the Philippines, securities satisfactory to the Commission,
consisting of bonds or other evidence of indebtedness of the
Government of the Philippines, its political subdivisions and
instrumentalities, or of government-owned or -controlled corporations
and entities, shares of stock or debt securities that are registered under
Republic Act No. 8799, otherwise known as "The Securities Regulation
Code," shares of stock in domestic corporations listed in the stock
exchange, shares of stock in domestic insurance companies and banks,
any financial instrument determined suitable by the Commission, or
any combination thereof with an actual market value of at least Five
hundred thousand pesos (P500,000.00) or such other amount that may
be set by the Commission: Provided, however, That within six (6) months
after each fiscal year of the licensee, the Commission shall require the
licensee to deposit additional securities or financial instruments
equivalent in actual market value to two percent (2%) of the amount by
which the licensee's gross income for that fiscal year exceeds Ten
million pesos (P10,000,000.00). The Commission shall also require the
deposit of additional securities or financial instruments if the actual
market value of the deposited securities or financial instruments has
decreased by at least ten percent (10%) of their actual market value at
the time they were deposited. The Commission may, at its discretion,
release part of the additional deposit if the gross income of the licensee
has decreased, or if the actual market value of the total deposit has
increased, by more than ten percent (10%) of their actual market value
at the time they were deposited. The Commission may, from time to
time, allow the licensee to make substitute deposits for those already on
deposit as long as the licensee is solvent. Such licensee shall be entitled
to collect the interest or dividends on such deposits. In the event the
licensee ceases to do business in the Philippines, its deposits shall be
returned, upon the licensee's application and upon proof to the
satisfaction of the Commission that the licensee has no liability to
Philippine residents, including the Government of the Republic of the
Philippines. For purposes of computing the securities deposit, the
composition of gross income and allowable deductions therefrom shall
be in accordance with the rules of the Commission.
SECTION 144. Who May be a Resident Agent.— A resident agent
may be either an individual residing in the Philippines or a domestic
corporation lawfully transacting business in the Philippines:
Provided,That an individual resident agent must be of good moral
character and of sound financial standing: Provided, further,That in case
of a domestic corporation who will act as a resident agent, it must
likewise be of sound financial standing and must show proof that it is
in good standing as certified by the Commission.
SECTION 145. Resident Agent; Service of Process.— As a
condition to the issuance of the license for a foreign corporation to
transact business in the Philippines, such corporation shall file with the
Commission a written power of attorney designating a person who
must be a resident of the Philippines, on whom summons and other
legal processes may be served in all actions or other legal proceedings
against such corporation, and consenting that service upon such
resident agent shall be admitted and held as valid as if served upon the
duly authorized officers of the foreign corporation at its home office.
Such foreign corporation shall likewise execute and file with the
Commission an agreement or stipulation, executed by the proper
authorities of said corporation, in form and substance as follows:
"The (name of foreign corporation) hereby
stipulates and agrees, in consideration of being
granted a license to transact business in the
Philippines, that if the corporation shall cease to
transact business in the Philippines, or shall be
without any resident agent in the Philippines on
whom any summons or other legal process may be
served, then service of any summons or other legal
process may be made upon the Commission in any
action or proceeding arising out of any business or
transaction which occurred in the Philippines and
such service shall have the same force and effect as if
made upon the duly authorized officers of the
corporation at its home office."
Whenever such service of summons or other process is made
upon the Commission, the Commission shall, within ten (10) days
thereafter, transmit by mail a copy of such summons or other legal
process to the corporation at its home or principal office. The sending of
such copy by the Commission shall be a necessary part of and shall
complete such service. All expenses incurred by the Commission for
such service shall be paid in advance by the party at whose instance the
service is made.
It shall be the duty of the resident agent to immediately notify
the Commission in writing of any change in the resident agent's
address.
SECTION 146. Law Applicable. — A foreign corporation
lawfully doing business in the Philippines shall be bound by all laws,
rules and regulations applicable to domestic corporations of the same
class, except those which provide for the creation, formation,
organization or dissolution of corporations or those which fix the
relations, liabilities, responsibilities, or duties of stockholders,
members, or officers of corporations to each other or to the corporation.
SECTION 147. Amendments to Articles of Incorporation or Bylaws
of Foreign Corporations.— Whenever the articles of incorporation or
bylaws of a foreign corporation authorized to transact business in the
Philippines are amended, such foreign corporation shall, within sixty
(60) days after the amendment becomes effective, file with the
Commission, and in proper cases, with the appropriate government
agency, a duly authenticated copy of the amended articles of
incorporation or bylaws, indicating clearly in capital letters or
underscoring the change or changes made, duly certified by the
authorized official or officials of the country or State of incorporation.
Such filing shall not in itself enlarge or alter the purpose or purposes
for which such corporation is authorized to transact business in the
Philippines.
SECTION 148. Amended License.— A foreign corporation
authorized to transact business in the Philippines shall obtain an
amended license in the event it changes its corporate name, or desires
to pursue other or additional purposes in the Philippines, by
submitting an application with the Commission, favorably endorsed by
the appropriate government agency in the proper cases.
SECTION 149. Merger or Consolidation Involving a Foreign
Corporation Licensed in the Philippines.— One or more foreign
corporations authorized to transact business in the Philippines may
merge or consolidate with any domestic corporation or corporations if
permitted under Philippine laws and by the law of its incorporation:
Provided, That the requirements on merger or consolidation as provided
in this Code are followed.
Whenever a foreign corporation authorized to transact
business in the Philippines shall be a party to a merger or consolidation
in its home country or State as permitted by the law authorizing its
incorporation, such foreign corporation shall, within sixty (60) days
after the effectivity of such merger or consolidation, file with the
Commission, and in proper cases, with the appropriate government
agency, a copy of the articles of merger or consolidation duly
authenticated by the proper official or officials of the country or State
under whose laws the merger or consolidation was effected: Provided,
however,That if the absorbed corporation is the foreign corporation
doing business in the Philippines, the latter shall at the same time file a
petition for withdrawal of its license in accordance with this Title.
SECTION 150. Doing Business without a License.— No foreign
corporation transacting business in the Philippines without a license, or
its successors or assigns, shall be permitted to maintain or intervene in
any action, suit or proceeding in any court or administrative agency of
the Philippines; but such corporation may be sued or proceeded against
before Philippine courts or administrative tribunals on any valid cause
of action recognized under Philippine laws.
SECTION 151. Revocation of License.— Without prejudice to
other grounds provided under special laws, the license of a foreign
corporation to transact business in the Philippines may be revoked or
suspended by the Commission upon any of the following grounds:
(a) Failure to file its annual report or pay any fees as
required by this Code;
(b) Failure to appoint and maintain a resident agent in
the Philippines as required by this Title;
(c) Failure, after change of its resident agent or
address, to submit to the Commission a
statement of such change as required by this
Title;
(d) Failure to submit to the Commission an
authenticated copy of any amendment to its
articles of incorporation or bylaws or of any
articles of merger or consolidation within the
time prescribed by this Title;
(e) A misrepresentation of any material matter in any
application, report, affidavit or other
document submitted by such corporation
pursuant to this Title;
(f) Failure to pay any and all taxes, imposts,
assessments or penalties, if any, lawfully due
to the Philippine Government or any of its
agencies or political subdivisions;
(g) Transacting business in the Philippines outside of
the purpose or purposes for which such
corporation is authorized under its license;
(h) Transacting business in the Philippines as agent of
or acting on behalf of any foreign corporation
or entity not duly licensed to do business in
the Philippines; or
 (i) Any other ground as would render it unfit to
transact business in the Philippines.
SECTION 152. Issuance of Certificate of Revocation.— Upon the
revocation of the license to transact business in the Philippines, the
Commission shall issue a corresponding certificate of revocation,
furnishing a copy thereof to the appropriate government agency in the
proper cases.
The Commission shall also mail the notice and copy of the
certificate of revocation to the corporation, at its registered office in the
Philippines.
SECTION 153. Withdrawal of Foreign Corporations.— Subject to
existing laws and regulations, a foreign corporation licensed to transact
business in the Philippines may be allowed to withdraw from the
Philippines by filing a petition for withdrawal of license. No certificate
of withdrawal shall be issued by the Commission unless all the
following requirements are met:
(a) All claims which have accrued in the Philippines
have been paid, compromised or settled;
(b) All taxes, imposts, assessments, and penalties, if
any, lawfully due to the Philippine
Government or any of its agencies or political
subdivisions, have been paid; and
(c) The petition for withdrawal of license has been
published once a week for three (3)
consecutive weeks in a newspaper of general
circulation in the Philippines.
TITLE XVI
Investigations, Offenses, and Penalties
SECTION 154. Investigation and Prosecution of Offenses. — The
Commission may investigate an alleged violation of this Code, or of a
rule, regulation, or order of the Commission.
The Commission may publish its findings, orders, opinions,
advisories, or information concerning any such violation, as may be
relevant to the general public or to the parties concerned, subject to the
provisions of Republic Act No. 10173, otherwise known as the "Data
Privacy Act of 2012," and other pertinent laws.
The Commission shall give reasonable notice to and coordinate
with the appropriate regulatory agency prior to any such publication
involving companies under their regulatory jurisdiction.
SECTION 155. Administration of Oaths, Subpoena of Witnesses
and Documents.— The Commission, through its designated officer, may
administer oaths and affirmations, issue subpoena and subpoena duces
tecum,take testimony in any inquiry or investigation, and may perform
other acts necessary to the proceedings or to the investigation.
SECTION 156. Cease and Desist Orders. — Whenever the
Commission has reasonable basis to believe that a person has violated,
or is about to violate this Code, a rule, regulation, or order of the
Commission, it may direct such person to desist from committing the
act constituting the violation.
The Commission may issue a cease and desist order ex parte to
enjoin an act or practice which is fraudulent or can be reasonably
expected to cause significant, imminent, and irreparable danger or
injury to public safety or welfare. The ex parte order shall be valid for a
maximum period of twenty (20) days, without prejudice to the order
being made permanent after due notice and hearing.
Thereafter, the Commission may proceed administratively
against such person in accordance with Section 158 of this Code,
and/or transmit evidence to the Department of Justice for preliminary
investigation or criminal prosecution and/or initiate criminal
prosecution for any violation of this Code, rule, or regulation.
SECTION 157. Contempt.— Any person who, without
justifiable cause, fails or refuses to comply with any lawful order,
decision, or subpoena issued by the Commission shall, after due notice
and hearing, be held in contempt and fined in an amount not exceeding
Thirty thousand pesos (P30,000.00).When the refusal amounts to clear
and open defiance of the Commission's order, decision, or subpoena,the
Commission may impose a daily fine of one thousand pesos (P1,000.00)
until the order, decision, or subpoena is complied with.
SECTION 158. Administrative Sanctions. — If, after due notice
and hearing, the Commission finds that any provision of this Code,
rules or regulations, or any of the Commission's orders has been
violated, the Commission may impose any or all of the following
sanctions, taking into consideration the extent of participation, nature,
effects, frequency and seriousness of the violation:
(a) Imposition of a fine ranging from Five thousand
pesos (P5,000.00) to Two million pesos
(P2,000,000.00),and not more than One
thousand pesos (P1,000.00) for each day of
continuing violation but in no case to exceed
Two million pesos (P2,000,000.00);
(b) Issuance of a permanent cease and desist order;
(c) Suspension or revocation of the certificate of
incorporation; and
(d) Dissolution of the corporation and forfeiture of its
assets under the conditions in Title XIV of this
Code.
SECTION 159. Unauthorized Use of Corporate Name; Penalties.—
The unauthorized use of a corporate name shall be punished with a
fine ranging from Ten thousand pesos (P10,000.00) to Two hundred
thousand pesos (P200,000.00).
 SECTION 160. Violation of Disqualification Provision; Penalties. —
When, despite the knowledge of the existence of a ground for
disqualification as provided in Section 26 of this Code, a director,
trustee or officer willfully holds office, or willfully conceals such
disqualification, such director, trustee or officer shall be punished with
a fine ranging from Ten thousand pesos (P10,000.00) to Two hundred
thousand pesos (P200,000.00) at the discretion of the court, and shall be
permanently disqualified from being a director, trustee or officer of any
corporation. When the violation of this provision is injurious or
detrimental to the public, the penalty shall be a fine ranging from
Twenty thousand pesos (P20,000.00) to Four hundred thousand pesos
(P400,000.00).
SECTION 161. Violation of Duty to Maintain Records, to Allow
Their Inspection or Reproduction; Penalties. — The unjustified failure or
refusal by the corporation, or by those responsible for keeping and
maintaining corporate records, to comply with Sections 45, 73, 92, 128,
177 and other pertinent rules and provisions of this Code on inspection
and reproduction of records shall be punished with a fine ranging from
Ten thousand pesos (P10,000.00) to Two hundred thousand pesos
(P200,000.00), at the discretion of the court, taking into consideration
the seriousness of the violation and its implications. When the violation
of this provision is injurious or detrimental to the public, the penalty is
a fine ranging from Twenty thousand pesos (P20,000.00) to Four
hundred thousand pesos (P400,000.00).
The penalties imposed under this section shall be without
prejudice to the Commission's exercise of its contempt powers under
Section 157 hereof.
SECTION 162. Willful Certification of Incomplete, Inaccurate,
False; or Misleading Statements or Reports; Penalties. — Any person who
willfully certifies a report required under this Code, knowing that the
same contains incomplete, inaccurate, false, or misleading information
or statements, shall be punished with a fine ranging from Twenty
thousand pesos (P20,000.00) to Two hundred thousand pesos
(P200,000.00). When the wrongful certification is injurious or
detrimental to the public, the auditor or the responsible person may
also be punished with a fine ranging from Forty thousand pesos
(P40,000.00) to Four hundred thousand pesos (P400,000.00).
SECTION 163. Independent Auditor Collusion; Penalties.— An
independent auditor who, in collusion with the corporation's directors
or representatives, certifies the corporation's financial statements
despite its incompleteness or inaccuracy, its failure to give a fair and
accurate presentation of the corporation's condition, or despite
containing false or misleading statements, shall be punished with a fine
ranging from Eighty thousand pesos (P80,000.00) to Five hundred
thousand pesos (P500,000.00).When the statement or report certified is
fraudulent, or has the effect of causing injury to the general public, the
auditor or responsible officer may be punished with a fine ranging
from One hundred thousand pesos (P100,000.00) to Six hundred
thousand pesos (P600,000.00).
SECTION 164. Obtaining Corporate Registration Through Fraud;
Penalties.— Those responsible for the formation of a corporation
through fraud, or who assisted directly or indirectly therein, shall be
punished with a fine ranging from Two hundred thousand pesos
(P200,000.00) to Two million pesos (P2,000,000.00).When the violation
of this provision is injurious or detrimental to the public, the penalty is
a fine ranging from Four hundred thousand pesos (P400,000.00) to Five
million pesos (P5,000,000.00).
SECTION 165. Fraudulent Conduct of Business; Penalties.— A
corporation that conducts its business through fraud shall be punished
with a fine ranging from Two hundred thousand pesos (P200,000.00) to
Two million pesos (P2,000,000.00).When the violation of this provision
is injurious or detrimental to the public, the penalty is a fine ranging
from Four hundred thousand pesos (P400,000.00) to Five million pesos
(P5,000,000.00).
SECTION 166. Acting as Intermediaries for Graft and Corrupt
Practices; Penalties.— A corporation used for fraud, or for committing or
concealing graft and corrupt practices as defined under pertinent
statutes, shall be liable for a fine ranging from One hundred thousand
pesos (P100,000.00) to Five million pesos (P5,000,000.00).
When there is a finding that any of its directors, officers,
employees, agents, or representatives are engaged in graft and corrupt
practices, the corporation's failure to install: (a) safeguards for the
transparent and lawful delivery of services; and (b) policies, code of
ethics, and procedures against graft and corruption shall be prima facie
evidence of corporate liability under this section.
SECTION 167. Engaging Intermediaries for Graft and Corrupt
Practices; Penalties.— A corporation that appoints an intermediary who
engages in graft and corrupt practices for the corporation's benefit or
interest shall be punished with a fine ranging from One hundred
thousand pesos (P100,000.00) to One million pesos (P1,000,000.00).
SECTION 168. Tolerating Graft and Corrupt Practices; Penalties.—
A director, trustee, or officer who knowingly fails to sanction, report, or
file the appropriate action with proper agencies, allows or tolerates the
graft and corrupt practices or fraudulent acts committed by a
corporation's directors, trustees, officers, or employees shall be
punished with a fine ranging from Five hundred thousand pesos
(P500,000.00) to One million pesos (P1,000,000.00).
SECTION 169. Retaliation against Whistleblowers. — A
whistleblower refers to any person who provides truthful information
relating to the commission or possible commission of any offense or
violation under this Code. Any person who, knowingly and with intent
to retaliate, commits acts detrimental to a whistleblower such as
interfering with the lawful employment or livelihood of the
whistleblower, shall, at the discretion of the court, be punished with a
fine ranging from One hundred thousand pesos (P100,000.00) to One
million pesos (P1,000,000.00).
SECTION 170. Other Violations of the Code; Separate Liability. —
Violations of any of the other provisions of this Code or its
amendments not otherwise specifically penalized therein shall be
punished by a fine of not less than Ten thousand pesos (P10,000.00) but
not more than One million pesos (P1,000,000.00). If the violation is
committed by a corporation, the same may, after notice and hearing, be
dissolved in appropriate proceedings before the Commission:
Provided,That such dissolution shall not preclude the institution of
appropriate action against the director, trustee, or officer of the
corporation responsible for said violation: Provided, further, That
nothing in this section shall be construed to repeal the other causes for
dissolution of a corporation provided in this Code.
Liability for any of the foregoing offenses shall be separate
from any other administrative, civil, or criminal liability under this
Code and other laws.
SECTION 171. Liability of Directors, Trustees, Officers, or Other
Employees.— If the offender is a corporation, the penalty may, at the
discretion of the court, be imposed upon such corporation and/or upon
its directors, trustees, stockholders, members, officers, or employees
responsible for the violation or indispensable to its commission.
SECTION 172. Liability of Aiders and Abettors and Other
Secondary Liability. — Anyone who shall aid, abet, counsel, command,
induce, or cause any violation of this Code, or any rule, regulation, or
order of the Commission shall be punished with a fine not exceeding
that imposed on the principal offenders, at the discretion of the court,
after taking into account their participation in the offense.
TITLE XVII
Miscellaneous Provisions
SECTION 173. Outstanding Capital Stock Defined. — The term
"outstanding capital stock," as used in this Code, shall mean the total
shares of stock issued under binding subscription contracts to
subscribers or stockholders, whether fully or partially paid, except
treasury shares.
SECTION 174. Designation of Governing Boards. — The
provisions of specific provisions of this Code to the contrary
notwithstanding, nonstock or special corporations may, through their
articles of incorporation or their bylaws, designate their governing
boards by any name other than as board of trustees.
SECTION 175. Collection and Use of Registration, Incorporation
and Other Fees. — For a more effective implementation of this Code, the
Commission is hereby authorized to collect, retain, and use fees, fines,
and other charges pursuant to this Code and its rules and regulations.
The amount collected shall be deposited and maintained in a separate
account which shall form a fund for its modernization and to augment
its operational expenses such as, but not limited to, capital outlay,
increase in compensation and benefits comparable with prevailing rates
in the private sector, reasonable employee allowance, employee health
care services, and other insurance, employee career advancement and
professionalization, legal assistance, seminars, and other professional
fees.
SECTION 176. Stock Ownership in Corporations. — Pursuant to
the duties specified by Article XIV of the Constitution, the National
Economic and Development Authority (NEDA) shall, from time to
time, determine if the corporate vehicle has been used by any
corporation, business, or industry to frustrate the provisions of this
Code or applicable laws, and shall submit to Congress, whenever
deemed necessary, a report of its findings, including recommendations
for their prevention or correction.
The Congress of the Philippines may set maximum limits for
stock ownership of individuals or groups of individuals related to each
other by consanguinity, affinity, or by close business interests, in
corporations declared to be vested with public interest pursuant to the
provisions of this section, or whenever necessary to prevent
anti-competitive practices as provided in Republic Act No. 10667,
otherwise known as the "Philippine Competition Act," or to implement
national economic policies designed to promote general welfare and
economic development, as declared in laws, rules and regulations.
In recommending to the Congress which corporations,
businesses and industries will be declared as vested with public
interest, and in formulating proposals for limitations on stock
ownership, the NEDA shall consider the type and nature of the
industry, size of the enterprise, economies of scale, geographic location,
extent of Filipino ownership, labor intensity of the activity, export
potential, as well as other factors which are germane to the realization
and promotion of business and industry.
SECTION 177. Reportorial Requirements of Corporations. —
Except as otherwise provided in this Code or in the rules issued by the
Commission, every corporation, domestic or foreign, doing business in
the Philippines shall submit to the Commission:
(a) Annual financial statements audited by an
independent certified public accountant:
Provided,That if the total assets or total
liabilities of the corporation are less than Six
hundred thousand pesos (P600,000.00),the
financial statements shall be certified under
oath by the corporation's treasurer or chief
financial officer; and
(b) A general information sheet.
Corporations vested with public interest must also submit the
following:
 (1) A director or trustee compensation report; and
(2) A director or trustee appraisal or performance
report and the standards or criteria used to
assess each director or trustee.
The reportorial requirements shall be submitted annually and
within such period as may be prescribed by the Commission.
The Commission may place the corporation under delinquent
status in case of failure to submit the reportorial requirements three (3)
times, consecutively or intermittently, within a period of five (5) years.
The Commission shall give reasonable notice to and coordinate with
the appropriate regulatory agency prior to placing on delinquent status
companies under their special regulatory jurisdiction.
Any person required to file a report with the Commission may
redact confidential information from such required report:
Provided,That such confidential information shall be filed in a
supplemental report prominently labelled "confidential," together with
a request for confidential treatment of the report and the specific
grounds for the grant thereof.
SECTION 178. Visitorial Power and Confidential Nature of
Examination Results. — The Commission shall exercise visitorial powers
over all corporations, which powers shall include the examination and
inspection of records, regulation and supervision of activities,
enforcement of compliance, and imposition of sanctions in accordance
with this Code.
Should the corporation, without justifiable cause, refuse or
obstruct the Commission's exercise of its visitorial powers, the
Commission may revoke its certificate of incorporation, without
prejudice to the imposition of other penalties and sanctions under this
Code.
All interrogatories propounded by the Commission and the
answers thereto, as well as the results of any examination made by the
Commission or by any other official authorized by law to make an
examination of the operations, books, and records of any corporation,
shall be kept strictly confidential, except when the law requires the
same to be made public, when necessary for the Commission to take
action to protect the public or to issue orders in the exercise of its
powers under this Code, or where such interrogatories, answers or
results are necessary to be presented as evidence before any court.
SECTION 179. Powers, Functions, and Jurisdiction of the
Commission.— The Commission shall have the power and authority to:
(a) Exercise supervision and jurisdiction over all
corporations and persons acting on their
behalf, except as otherwise provided under
this Code;
(b) Pursuant to Presidential Decree No. 902-A, retain
jurisdiction over pending cases involving
intra-corporate disputes submitted for final
resolution. The Commission shall retain
jurisdiction over pending suspension of
payment/rehabilitation cases filed as of 30
June 2000 until finally disposed;
(c) Impose sanctions for the violation of this Code, its
implementing rules and orders of the
Commission;
(d) Promote corporate governance and the protection
of minority investors, through, among others,
the issuance of rules and regulations
consistent with international best practices;
(e) Issue opinions to clarify the application of laws,
rules and regulations;
(f) Issue cease and desist orders ex parte to prevent
imminent fraud or injury to the public;
(g) Hold corporations in direct and indirect contempt;
(h) Issue subpoena duces tecum and summon witnesses
to appear in proceedings before the
Commission;
(i) In appropriate cases, order the examination, search
and seizure of documents, papers, files and
records, and books of accounts of any entity
or person under investigation as may be
necessary for the proper disposition of the
cases, subject to the provisions of existing
laws;
(j) Suspend or revoke the certificate of incorporation
after proper notice and hearing;
(k) Dissolve or impose sanctions on corporations,
upon final court order, for committing, aiding
in the commission of, or in any manner
furthering securities violations, smuggling,
tax evasion, money laundering, graft and
corrupt practices, or other fraudulent or
illegal acts;
(l) Issue writs of execution and attachment to enforce
payment of fees, administrative fines, and
other dues collectible under this Code;
(m) Prescribe the number of independent directors
and the minimum criteria in determining the
independence of a director;
 (n) Impose or recommend new modes by which a
stockholder, member, director, or trustee may
attend meetings or cast their votes, as
technology may allow, taking into account the
company's scale, number of shareholders or
members, structure, and other factors
consistent with the basic right of corporate
suffrage;
(o) Formulate and enforce standards, guidelines,
policies, rules and regulations to carry out the
provisions of this Code; and
(p) Exercise such other powers provided by law or
those which may be necessary or incidental to
carrying out the powers expressly granted to
the Commission.
In imposing penalties and additional monitoring and
supervision requirements, the Commission shall take into consideration
the size, nature of the business, and capacity of the corporation.
No court below the Court of Appeals shall have jurisdiction to
issue a restraining order, preliminary injunction, or preliminary
mandatory injunction in any case, dispute, or controversy that directly
or indirectly interferes with the exercise of the powers, duties and
responsibilities of the Commission that falls exclusively within its
jurisdiction.
SECTION 180. Development and Implementation of Electronic
Filing and Monitoring System. — The Commission shall develop and
implement an electronic filing and monitoring system. The
Commission shall promulgate rules to facilitate and expedite, among
others, corporate name reservation and registration, incorporation,
submission of reports, notices, and documents required under this
Code, and sharing of pertinent information with other government
agencies.
SECTION 181. Arbitration for Corporations.— An arbitration
agreement may be provided in the articles of incorporation or bylaws
of a corporation. When such an agreement is in place, disputes between
the corporation, its stockholders or members, which arise from the
implementation of the articles of incorporation or bylaws, or from
intra-corporate relations, shall be referred to arbitration. A dispute shall
be nonarbitrable when it involves criminal offenses and interests of
third parties.
The arbitration agreement shall be binding on the corporation,
its directors, trustees, officers, and executives or managers.
To be enforceable, the arbitration agreement should indicate
the number of arbitrators and the procedure for their appointment. The
power to appoint the arbitrators forming the arbitral tribunal shall be
granted to a designated independent third party. Should the third party
fail to appoint the arbitrators in the manner and within the period
specified in the arbitration agreement, the parties may request the
Commission to appoint the arbitrators. In any case, arbitrators must be
accredited or must belong to organizations accredited for the purpose
of arbitration.
The arbitral tribunal shall have the power to rule on its own
jurisdiction and on questions relating to the validity of the arbitration
agreement. When an intra-corporate dispute is filed with a Regional
Trial Court, the court shall dismiss the case before the termination of
the pretrial conference, if it determines that an arbitration agreement is
written in the corporation's articles of incorporation, bylaws, or in a
separate agreement.
The arbitral tribunal shall have the power to grant interim
measures necessary to ensure enforcement of the award, prevent a
miscarriage of justice, or otherwise protect the rights of the parties.
A final arbitral award under this section shall be executory
after the lapse of fifteen (15) days from receipt thereof by the parties
and shall be stayed only by the filing of a bond or the issuance by the
appellate court of an injunctive writ.
The Commission shall formulate the rules and regulations,
which shall govern arbitration under this section, subject to existing
laws on arbitration.
SECTION 182. Jurisdiction Over Party-List Organizations.— The
powers, authorities, and responsibilities of the Commission involving
party-list organizations are transferred to the Commission on Elections
(COMELEC).
Within six (6) months after the effectivity of this Act, the
monitoring, supervision, and regulation of such corporations shall be
deemed automatically transferred to the COMELEC.
For this purpose, the COMELEC, in coordination with the
Commission, shall promulgate the corresponding implementing rules
for the transfer of jurisdiction over the abovementioned corporations.
SECTION 183. Applicability of the Code.— Nothing in this Act
shall be construed as amending existing provisions of special laws governing
the registration, regulation, monitoring and supervision of special corporations
such as banks, nonbank financial institutions and insurance companies.
Notwithstanding any provision to the contrary, regulators such
as the Bangko Sentral ng Pilipinas and the Insurance Commission shall
exercise primary authority over special corporations such as banks,
nonbank financial institutions, and insurance companies under their
supervision and regulation.
SECTION 184. Effect of Amendment or Repeal of This Code, or the
Dissolution of a Corporation. — No right or remedy in favor of or against any
corporation, its stockholders, members, directors, trustees, or officers, nor any
liability incurred by any such corporation, stockholders, members, directors,
 trustees, or officers, shall be removed or impaired either by the subsequent
dissolution of said corporation or by any subsequent amendment or repeal of
this Code or of any part thereof.
SECTION 185. Applicability to Existing Corporations. — A
corporation lawfully existing and doing business in the Philippines
affected by the new requirements of this Code shall be given a period of
not more than two (2) years from the effectivity of this Act within
which to comply.
SECTION 186. Separability Clause.— If any provision of this Act
is declared invalid or unconstitutional, the other provisions hereof
which are not affected thereby shall continue to be in full force and
effect.
SECTION 187. Repealing Clause. — Batas Pambansa Blg. 68,
otherwise known as "The Corporation Code of the Philippines," is
hereby repealed. Any law, presidential decree or issuance, executive
order, letter of instruction, administrative order, rule or regulation
contrary to or inconsistent with any provision of this Act is hereby
repealed or modified accordingly.
SECTION 188. Effectivity.— This Act shall take effect upon
completion of its publication in the Official Gazette or in at least two (2)
newspapers of general circulation.
Approved: February 20, 2019.

Published in The Manila Bulletin on February 23, 2019.

Published in the Official Gazette, Vol. 115, No. 15, p. 3655 on April
15, 2019.
||| (Revised Corporation Code of the Philippines, Republic Act No. 11232,
[February 20, 2019])